Bill blow on import, transport

Following the coal crisis in September-October 2021 and April-May 2022, the Union power ministry earlier this year directed all power generation companies to mix imported coal up to 6% of their requirement by September. In addition, the use of the rail-ship-rail route to transport coal from coal-rich eastern states to user plants in western India has also increased costs.

“Procurement of more coal (both domestic and import) and the new RSR (rail-ship-rail) route could increase the net cost of power generation by about 40 paise per kilowatt hour (kWh),” said a top company executive. The thermal power generation company said on condition of anonymity.

Several states have already come out with fresh tariff orders for FY24 and some of them have increased tariffs. However, with the likely increase in power generation cost, there could be further increase in tariffs during the year.

The executive quoted above, however, noted that since producer companies already had some imported coal stock from last year and the domestic coal stock at the beginning of this year was already higher than at the beginning of FY23 , so there cannot be an increase in spending on imports. higher than the previous financial year.

Vikram V., vice-president and sector head of corporate ratings at ICRA, said, “For inland power projects that are not near the coast, blending of 6% imported coal could result in 25-35 paise per kilowatt hour at the generation level.” Limited

The blending mandate could further strain the finances of power producers, who have yet to recover the cost of last year’s costly coal imports. Analysts noted that although global coal prices are down from last year’s highs, they are still higher than they were a few years ago.

Sudhir Kumar, director, CareAge Ratings, said, “Blending with imported coal will increase the variable cost of power generation. Imported coal was around $60 a tonne three years back and is now in the range of $140-150 a tonne. Last year it reached $400 a tonne.”

The new RSR route proposed to avoid rail congestion and shortage of rakes is also costly and time consuming. Under this, coal from mines in Odisha and other coal-rich states is first transported by rail to ports, then via ships to the west coast and from there by rail to thermal plants in the northern states of Punjab, Rajasthan and North Is. State. The RSR route to North Indian states takes up to 15 days as against 4 to 5 days through rail alone. The time lag will be observed in the first consignment, and if the supply continues regularly, the time lag will reduce and there will be no impact on the supply.

State-run NTPC Ltd has started transporting coal from Paradip in Odisha to its two thermal power plants at Jhajjar in Haryana and Dadri in Uttar Pradesh through RSRs. Its Kudgi plant in Karnataka and Unchahar in Uttar Pradesh are also planning to follow this route. Rajasthan, Gujarat and Maharashtra have floated tenders for supply of coal on the RSR route.

Queries sent to the power ministry and NTPC remained unanswered till press time.

In March, Union Coal Secretary Amrit Lal Meena said in an interview that the cost of coal supplied by rail was 4,700 per tonne, while for RSR it will be 7,400. However, it will be much lower 10,000-12,000 was spent on imported coal. “We have to look with a ‘nation-as-a-whole’ approach. It is slightly more expensive than the cost of the rail route, but since the railway network is congested, if the 5-10% shortfall in supply is overcome through additional cost If it can be done, a ‘nation as a whole’ approach is better,” he said.

Sudhir Kumar of CareAge said that while domestic coal will be costlier 5,000 per ton if transported by inland route, it would cost approx. 7,000 per tonne when the sea route is used.