Taking a consumer-friendly initiative for the benefit of electricity consumers, the government has permitted state governments to transfer domestic coal linkages of one power station to another in order to induce cost reduction in power generation.
Under the provision, the linkage can only be transferred to those plants which have been established through a bidding process under the guidelines issued by the power ministry based on the net heat rate. The process requires ensuring that the concerned plant is more cost efficient and the power generated from such plants is supplied to the state itself.
The entire savings due to the flexible use of such linkages would be automatically passed on to the power distributing companies and ultimately to the consumers. Besides, this would help in reducing coal imports as well as in carbon emissions as the coal will be used in the more efficient power plants with lower station heat rate.
At present, consumers in Punjab, Haryana and Uttar Pradesh will benefit from this provision, with the expected savings in Punjab alone estimated to be around INR 300 crore annually, as per the power ministry.
Imports on the rise again on spurt in electricity demand
Coal imports by the power plants had fallen by 34% year-on-year (y-o-y) to 45.47 mn t in FY ’21 compared to 69.22 mn t in FY ’20 in view of the contraction in power demand.
However, with a surge in power demand, imports have witnessed a steep rise of 25% y-o-y to 4.28 mn t in Apr ’21, as per the data provided by the Central Electricity Authority (CEA).
While the government is determined to bring down the level of imported coal for blending purposes to ‘zero’ , a volume of 0.85 mn t was imported for blending purposes during the month in addition to volumes imported by plants which are designed to run on imported coal.
In order to attain its long-term goal, the government has taken a series of measures to supply coal to reduce dependence on imports.
First, Coal India Ltd (CIL) has decided to continue with the supply of coal to the power plants under the import substitution scheme in the ongoing fiscal whereby power utilities desirous of procuring domestic coal in lieu of imported coal have been asked to submit their requirements.
Additionally, the coal miner has extended the trigger level to 80% under the fuel supply agreement (FSA) route for power plants to encourage them to purchase higher volumes of domestic coal.
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