July 21, 2020: Coal India subsidiary Western Coalfields is ready to supply the entire fuel requirements of its power consumers in central, west, and south India from the current year onwards, offering them the option to save substantially on freight costs, the company indicated in a statement.
According to the statement, landed cost of fuel procured from Western Coalfields is much lower than from other coal companies for consumers located in these regions and Mahagenco, one of its major customers saved an average Rs.1200 per tonne on freight in recent years.
The company said it intends to ramp up production from 57.6 million tonnes in 2019-20 to 75 million tonnes in 2023-24 and further to 100 million tonnes by 2027-28 to meet the entire fuel demand of power generators in central, west, and south India.
Western Coalfields has estimated Mahagenco’s fuel requirement during 2020-21 at 35 million tonnes and has already submitted proposals for supplying the full quantity. It has also started coal dispatch to private power producers against import substitution.
State government-owned generation companies of Maharashtra (Mahagenco), Madhya Pradesh (MPPGCL), Gujrat (GSECL) and Karnataka (KPCL) along with other private power producers were largely dependent on Western Coalfields for their coal requirement. Mahagenco had the largest share of more than 50% of the dispatch followed by MPPGCL with 12% share, it said.
However, coal production at Western Coalfields had declined in the past due to non-availability of land and exhaustion of reserves at existing mines, restricting the company’s growth.
“Power consumers had no option but to take coal from other subsidiaries of Coal India, like South Eastern Coalfields, Mahanadi Coalfields and Singareni Collieries. Due to larger distances, these consumers had to pay more on railway freight making the landed cost of coal higher,” it said.
The company has invested larger sums in land acquisition and in offering employment to project-affected families. It commissioned 20 new projects, which contributed 35.8 million tonnes during 2019-20, increasing total production to 57.6 million tonnes.
To meet additional demand from power consumers, it dedicated 11 mines for them and charged a small premium on the fuel supplied from these mines while consumers saved on freight cost. It helped the company open new mines and supply higher quantities.
Source: Economic Times
