Lok Sabha Question No. 1470 (UNSTARRED), answered on 2018-12-19
Subject: Freight Cost on Coal
Ministry: COAL
Asked by: DEVUSINH JESINGBHAI CHAUHAN

## GOVERNMENT OF INDIA MINISTRY OF COAL LOK SABHA UNSTARRED QUESTION NO.1470 TO BE ANSWERED ON 19.12.2018

## Freight Cost on Coal

## 1470. SHRI DEVUSINH CHAUHAN:

## Will the Minister of COAL be pleased to state:

- (a)  whether  the  freight  cost  on  coal  is  higher  than  the  actual  coal  cost resulting into higher cost of generation of power as the State of Gujarat is at a distance of 1600 km from the eastern coast and if so, the steps taken by Government to reduce cost of coal and burden of imported coal;
- (b) the steps taken by the Government regarding the rationalization of coal linkage;
- (c)  the  steps  taken  to  allocate  more  coal  to  State  Government/  GSECL  in view of large requirement of coal; and
- (d) the steps initiated regarding swapping  of  coal  to  Government  of Gujarat/GSECL, keeping in view the suggestion that domestic coal may be handed over at mine and imported coal at port and swapping to be based on heating value terms based on third party sampling and analysis at loading end?

## ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL)

(a): The details of actual freight paid for coal transportation are maintained by the users. In order to reduce the cost of power generation and efficient utilisation  of  coal,  the  Government,  on  04.05.2016, approved the proposal for allowing flexibility in utilization of domestic coal  amongst  power generating stations by using coal in efficient plants as well as by saving in transportation cost. The State/Central Gencos have flexibility to utilize their coal in most efficient and cost effective manner in their own power plants as well  as  by  transferring  coal  to  other  State/Central/IPP  Power  plants  for generation of cheaper power.

(b): Rationalization of Coal Linkage: An Inter-Ministerial Task Force (IMTF) was  constituted  in  June,  2014  to  undertake  a  comprehensive  review  of existing  sources  of  coal  with  a  view  to  optimize  transportation  cost  and materialization under the given technical constraints. The linkage rationalization for State/Central PSUs was implemented initially, based on IMTF recommendation and carried forward by Coal India Limited (CIL)/Singareni Collieries Company Limited (SCCL) based on coal availability and requests of public sector Power Plants. In addition CIL has rationalized sources  (subsidiary  company-wise)  based  on  the  request  of  public  sector power plants with a view to optimize the transportation cost and materialization taking into account coal availability and logistics. Policy for Linkage  rationalization  for  Independent  Power  Producers  (IPPs)  has  also been issued on 15.05.2018.

So  far,  transportation  of  61.08  Million  Tonnes  (MT)  of  coal  has  been rationalized  with  annual  potential  savings  of  Rs.  3,651  crore.  Out  of  this quantity of coal rationalized, 4.2 MT has been transferred to GSECL plants.

(c): Under the provisions of the Coal Mines (Special Provisions) Act, 2015, one  coal  mine,  namely,  Gare  Palma  Sector-I,  located  in  the  State  of Chhattisgarh, has been allocated to GSECL for specified end use 'Power'.

Further, Bridge Linkages have been granted and tenure extended for the two units of GSECL, namely, Ukai Unit-6 (500 MW) and Wanakbori TPS Unit-8 (800 MW).

(d): In  line  with  the  recommendation  of  the  Standing  Linkage  Committee (Long  Term) dated  11.08.2014, an agreement for swapping of coal linkage was signed between Gujarat State Electricity Corporation Limited (GSECL) and NTPC in November, 2014 for swapping of 1.0 MT of  coal.  As  per  the agreed  terms,  GSECL  offered  its  South  Eastern  Coalfields  Limited  (SECL) linked coal to NTPC Korba STPS and the coal imported by NTPC was to be supplied  to  GSECL  plant  to  avoid  criss-cross  movement  of  domestic  and imported  coal.  This  led  to  a  potential  annual  savings  of  Rs.  458  crore  to GSECL.  The  swapping  arrangement  was  continued  till  import  of  coal  by NTPC upto 2016-17. Coal supplied to GSECL is covered under Third Party Sampling and analysis at the loading as well as unloading points.

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