PSU Watch logo

| Pradhan inaugurates Shell India’s LNG truck-loading unit at Hazira |   | Centre plans E-portal to sell MSME products: Gadkari |   | Cabinet approves Rs 5,000 cr for 850 MW Ratle hydro power project in Kishtwar |   | Cabinet approves signing of MoU between India and Uzbekistan for Solar Energy |   | SC allows CERC to pass orders on 174 reserved cases, resume administrative operations |  

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

MAHAGENCO has the largest share of more than 50 percent of the dispatch from WCL, followed by MPPGCL with 12 percent share

MAHAGENCO has the largest share of more than 50 percent of the dispatch from WCL, followed by MPPGCL with 12 percent share.
MAHAGENCO has the largest share of more than 50 percent of the dispatch from WCL, followed by MPPGCL with 12 percent share.

New Delhi: With substantial grown in coal production over the last five years, Western Coalfields Limited (WCL), a subsidiary of Coal India Limited (CIL), has been able to provide cheaper landed price coal to state and private power generation companies of central, western and southern India, especially Maharashtra's MAHAGENCO, which consumes bulk of the coal produced by WCL. This effort has helped gencos in reducing power cost, which, in turn, will lead to cheaper power for consumers. The average saving on freight to MAHAGENCO due to procuring coal from WCL is Rs 1,200 per tonne, said WCL on Tuesday.

State power producers of Maharashtra (MAHAGENCO), Madhya Pradesh (MPPGCL), Gujrat (GSECL) and Karnataka (KPCL), along with other private power producers, are largely dependent on WCL for their coal requirement. MAHAGENCO has the largest share of more than 50 percent of the dispatch, followed by MPPGCL with 12 percent share.

Coal production in WCL went down to a level of 39 Million Tonnes (MT) during FY2013-14. The unavailability of projects and the non-availability of land were the major issues restricting the company from growing further. Power consumers had no option, but to take coal from other subsidiaries of Coal India, viz. SECL, MCL and SCCL. Due to larger distance, consumers had to pay more on railway freight making landed cost of coal higher.

WCL planned for the expansion of existing projects and opening of new projects by investing in additional land acquisition, employment against land etc. During the last five years, WCL opened up 20 new projects with a capacity of 45.64 MT. These projects contributed 35.8 MT production during FY'2019-20. As a result, the production of WCL during FY2019-20 increased to the level of 57.6 MT. This growth is substantial as WCL lost 22 MT of production during the last five years due to exhaustion of reserves.

During FY’2013-14, dispatch to MAHAGENCO was 17.60 MT and it has gone up to 26 MT in FY2019-20.

In order to cater more to power consumers, WCL has dedicated its 11 mines for the supply of coal, specifically to the power sector by notifying these mines as ‘Mine Specific Sources’. The saving to consumers on freight cost is partly being shared by WCL by charging a small premium over the regular price. This has helped WCL to open new mines, which will lead to a win-win situation for both WCL and its customers by further augmenting higher dispatches in the coming years. It is pertinent to mention that the landed cost of mine specific coal from WCL is also much cheaper than the landed cost of coal from other coal companies to the consumers located in central, western and southern regions, including MAHAGENCO.

WCL has envisaged an ambitious plan of increasing production from the current level of 57.6 MT to 75 MT in FY'2023-24 and further to 100 MT FY'2027-28. In view of growth in production and dispatch, WCL is geared-up to cater to the entire coal requirement of these consumers from FY'2020-21 onwards. It is estimated that the coal requirement of MAHAGENCO during FY'2020-21 will be around 35 MT. WCL has already submitted a proposal to MAHAGENCO for sourcing their entire coal requirement from WCL which will result in huge savings to MAHAGENCO on freight cost. WCL has also started dispatch of coal to the private power producers against import substitution.

(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)