Thursday, September 29, 2022

How WCL coal is helping gencos in Central & Western India cut costs?

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New Delhi: With a substantial increase in coal production over the last five years, WCL (Western Coalfields Ltd) has been able to provide more coal to nearby power generation companies of central and western India at their doorstep. Availability of coal from a nearby source has helped power generation companies in getting coal at cheaper landed cost.

“WCL is committed to meet the coal requirement of power consumers located in central and western part of India. State gencos of Maharashtra (MAHAGENCO) and Madhya Pradesh (MPPGCL) are the major consumers and are largely dependent on WCL for their coal requirement. MAHAGENCO has the largest share of more than 50 percent of the dispatch followed by MP with 12 percent share. Apart from these, Gujarat State Electricity Board, NTPC, Adani Power (Maharashtra) Ltd are other power consumers partially linked to WCL,” an official release said.

How WCL turned around its dwindling coal production?

Coal production in WCL went down to a precarious level of 39 million tonnes during 2013-14 from an all-time high of 45 million tonnes during 2008-09. Unviability of projects and non-availability of land were the major issues restricting the company from growing further. Power generation companies of central and western India had no option, but to take coal from other subsidiaries of Coal India like SECL, MCL. Due to larger distance, consumers had to pay more on railway freight, making the landed cost of coal higher.

With an extensive exercise of revisiting all available projects and major liberalisation in R&R policy in a span of one year, WCL could get a substantial chunk of land in possession which paved the way for the opening of new viable projects. Within five years, WCL opened 20 new projects which substantially increased coal production year-by-year. From a level of 39.73 Million Tonnes in 2013-14, WCL achieved 53.18 Million Tonnes of Coal production in 2018-19 with a phenomenal growth of over 15 percent over the previous year. These new mines contributed 35.8 Million Tonnes during 2018-19. This growth in production was despite closing down of old mines producing 22 Million Tonnes of coal in these five years.

Making coal available at doorstep to power plants

With the availability of more coal, WCL increased coal supply to nearby power plants and also offered swapping of coal to power units from subsidiaries like SECL, MCL that were far off, under coal rationalisation policy of the Ministry of Coal. This resulted in an increase in coal despatch to MAHAGENCO from 17 Million Tonnes in 2013-14 to 28 Million Tonnes in 2018-19.

Similarly, dispatch to MPPGCL increased from 4 Million Tonnes to 7 Million Tonnes in 2018-19. Gujarat State Genco has also been provided more coal by swapping 1.2 Million Tonnes from SECL. This trend of increase in coal supply is continuing during the current fiscal and will grow further. Availability of more coal at doorstep has manifold benefits to these power plants, like huge saving on account of freight cost, resulting in lower power tariff for its consumers. Apart from this, the environmental damage due to the transportation of coal from a longer distance also gets minimised.

MAHAGENCO saved Rs 1,200 per tonne due to doorstep delivery

Savings to MAHAGENCO on account of lower railway freight over the last five years due to more doorstep coal by WCL was approximately Rs 1,200 per tonne. In order to utilise this saving for more ease of doing business, MAHAGENCO and WCL have decided to have coal transportation from mines to power plants through pipe conveyor.

Accordingly, MAHAGENCO has invested a substantial amount of its savings for the installation of pipe conveyor from five mines of Nagpur Area of WCL to Koradi and Khaparkheda Thermal Power Stations and from one mine of Chandrapur Area to Chandrapur Super Thermal Power Station, which will further reduce the cost of transportation for MAHAGENCO by Rail/ Road and will also minimise environmental pollution.

WCL on course to surpass its production target for 2019-20

WCL is geared to surpass its production target of 56 Million Tonnes for 2019-20 again and is slated to register consecutive double-digit growth, the PSU said. The company has set an ambitious target of reaching 75 Million Tonnes of coal production by 2023-24 by the opening of bigger capacity projects. This growth in production will be even after the loss of 14 million tonnes of production on account of closure of old mines in the next three years.

WCL is providing around 80 percent of its total present requirement of coal to MAHAGENCO. Remaining 20 percent is still being catered to by SECL, MCL and SCCL. With further increase in coal production, WCL will be able to swap the remaining quantity of coal to provide full quantity in the next two-three years. Similarly, WCL is also marching towards providing full coal quantity to its central and western India consumers within the next two-three years. This will not only make cheaper coal available at their doorstep but will also reduce environmental pollution.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)

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