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Coal swapping scheme extended to pvt power producers, cement, steel sectors

On November 26, the IMTF approved “bilateral arrangements” between two willing consumers for swapping “full or part of their entitled quantity” for a “minimum tenure of swapping/rationalisation of six months”.

Written by Amitav Ranjan | New Delhi |
Updated: December 23, 2018 2:01:28 am
Coal swapping scheme extended to pvt power producers, cement, steel sectors Coal currently travels 477 km from a mine to a plant, with some power stations located up to 1,000 km away. (Representational Image)

After allowing coal swapping among state-run power plants, the inter-ministerial task force (IMTF) has decided to extend the supply rationalisation scheme to private power producers and non-regulated cement and steel sectors who are importing coal or have domestic supply linkages.

On November 26, the IMTF approved “bilateral arrangements” between two willing consumers for swapping “full or part of their entitled quantity” for a “minimum tenure of swapping/rationalisation of six months”.

“Maximum tenure in case of swapping between two linkage holders shall be lesser of the remaining tenure of the contracts of the willing participants.”

“In case a plant — which is importing coal — is one of the willing participants, the maximum tenure could be up to the tenure of the Fuel Supply Agreement (FSA) of the linked consumer,” the IMTF decided.

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Explained

Coal swapping extension to ease supply constraints

The proposal to extend the coal swapping among state-run power plants to private power producers and non-regulated cement and steel sectors that are importing coal or have domestic supply linkages is a move that could ease supply constraints. Consumers would benefit too as savings accruing due to swapping by a power producer would be passed on to them in the form of an adjustment in power tariff while the savings from non-regulated sectors would be deposited in a fund to be created by Indian Railways. The rationalisation of coal sourcing for 19 thermal plants of public sector undertakings last year had resulted in annual savings of Rs 3,354 crore by reducing supply distances and transport costs.

Savings accruing due to swapping by a power producer would be passed on to the consumers in the form of an adjustment in power tariff while the savings from non-regulated sectors would be deposited in a fund to be created by Indian Railways, it said.

Last March, Coal minister Piyush Goyal told parliament that the rationalisation of coal sourcing for 19 thermal plants of public sector undertakings had resulted in annual savings of Rs 3,354 crore by reducing supply distance and cutting transport costs.

In the current scenario, coal supplies are based on allocations made over the years to power plants and they are not necessarily the shortest distance between the mines and the generation units.

Coal currently travels 477 km from a mine to a plant, with some power stations located up to 1,000 km away.

The IMTF also approved creating a committee comprising officials from Ministries of Power, Coal and Steel and from Coal India Ltd and Indian Railways to “oversee the implementation of the policy recommendations and addressing key issues”.

This committee will also consider “on case to case basis” requests of transfer from a specified end-use consumer under the SHAKTI B and non-regulated sector linkage schemes to any other plant.

An electronic platform would be created for the participants to register and enter the details of their quantity, tenure, FSA tenure or import arrangement.

“While the registration shall be a continuous process, the application window shall be opened periodically as per the schedule decided by the Committee,” it said.

Coal India would be the nodal agency for the swapping arrangement.

In the event of any breach of any of the terms, Coal India shall have to right to take necessary actions, including termination of the Fuel Supply Agreement.

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