Coal linkage rationalisation: WCL offers 20-25 MT of cheaper coal to state gencos, NTPC, IPPs

New Delhi: In a bid to help power generation companies (gencos) reduce their generation cost, Western Coalfields Limited (WCL), a subsidiary of Coal India Limited (CIL), has offered an additional 20-25 Million Tonnes (MT) of coal to different power gencos of central, west and south India, central power PSUs like NTPC Limited, and Independent Power Producers (IPPs), at a cheaper landed price. This will not only help gencos to minimise their cost to reduce power tariffs, but will also be a factor to cut down the import of thermal coal in the interest of the nation, said WCL on Thursday.

'Coal linkage swapping procedure to be completed asap'

In a series of detailed discussions held during the last two days between WCL and state gencos of Maharashtra, Madhya Pradesh, Karnataka, Gujarat, followed by NTPC & IPPs, all parameters of existing linkage and future swapping have been discussed, along with financial benefit to gencos. "Efforts will be made to complete the swapping procedure at the earliest so that WCL may start dispatching the additional quantity by October 2020. The additional quantity offered for swapping ranges from 3-6 MT to different gencos, depending on their requirement. The quantity will further increase in the future subject to the availability of more surplus coal," said WCL.

WCL has the advantage of having its mining operations in central India. This helps consumers of the central, west and south India to get cheaper landed coal due to lesser Railway freight in comparison to other coal companies of CIL located in the Eastern part of the country. With locational advantage and phenomenal growth in production, WCL has offered 20-25 MT of coal to state gencos, NTPC & other independent power producers (IPPs) by swapping their linkage from other Coal companies. This will be in addition to their existing linkage quantity with WCL. 

Also read: Coal procurement from WCL helped MAHAGENCO save Rs 1,200 per tonne

The background

Coal production in WCL went down to a level of 39 MT during 2013-14. The power consumers had no option, but to take coal from other subsidiaries of CIL viz. SECL, MCL & also from SCCL. Due to larger distance, consumers had to pay more on Railway freight, making landed price of coal higher. However, WCL has opened 20 projects in the last six years which contributed 36 MT production during 2019-20. It has also produced about 58 Million Tonnes of coal during 2019-20 even after losing 22 Million Tonnes of production during the last 6 years due to the exhaustion of reserves. WCL has now planned to open 20 more projects to take the production level to 75 MT by 2023-24 and 100 MT by 2026-27. With substantial growth in coal production, WCL has now sufficient coal to offer to its nearby consumers at a cheaper landed price.

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