The Union Cabinet on Wednesday approved a proposal to relax norms for utilisation of domestic coal aimed at bringing down the cost of power generation.
“The Union Cabinet has approved a proposal to provide flexibility in utilisation of domestic coal for reducing the cost of power generation at its meeting held today,” Power Minister Piyush Goyal told reporters after the Cabinet meeting here.
The move, Goyal said, will help reduce cost of power generation by 40-50 paise per unit. He expects that this will lead to savings of Rs 25,000 crore per annum in 4-5 years. Earlier, the government has allowed swapping of coal mines by users so that transportation cost can be reduced for generation of power.
The government has allowed coal swapping in 19 blocks which brought down the cost of power generation as users were able to source the dry fuel from mines located nearer to them.
The flexibility in utilisation of domestic coal is also required at this point, according to experts, as the international price of coal has been set at a lower level. The option of cheaper coal imports and increase in production by Coal India and its arms have led to a situation where stocks of the dry fuel are piling up.
The proposal is also aimed at improving the consumption of domestic coal by the industry, mainly the power sector, against the backdrop of cheaper imports and high production of the dry fuel in the country.