Power costs may reduce by 50p/unit on coastal movement of coal

Coastal movement of coal could cut power costs by 50 paisa per unit for power plants besides saving Rs 17,000 crore annually, a report under government’s ambitious Sagarmala project has said.

Coastal movement of coal could cut power costs by 50 paisa per unit for power plants besides saving Rs 17,000 crore annually, a report under government’s ambitious Sagarmala project has said.

Workers use heavy machinery to shift a pile of coal at an open cast mine owned by The Sinagareni Collieries Company Limited (SCCL) at Godavarikhani, some 250 kilometers east of Hyderabad.(AFP File)

Sagarmala is an ambitious port-led infrastructure development programme of the government to harness India’s 7,500-km coastline and its perspective plan was launched by Prime Minister Narendra Modi in April.

“Using the right infrastructure and institutional support, India can coastally move 190 to 200 million tonne per annum (MTPA) of coal, and save around Rs 17,000 crore per annum, by 2025,” said the government’s final draft report on cargo projections under Sagarmala.

In 2013-14, nearly 740 MTPA of coal moved through the country predominantly through rail and of this barely 23 MTPA moved through coastal shipping even though this mode costs one-sixth that of rail cost at about 20 paisa per tonne against about Rs 1.2 per tonne.

More than 90 per cent of the rail routes relevant to coal are running at over 100 per cent utilisation.

“With the expected ramp-up in coal production by Coal India Limited, India may need to move 1,000 to 1,200 MTPA coal across the country by 2025, creating tremendous pressure on the already congested railways,” the report said.

It carried out a logistics cost comparison for all modal mix combinations for India’s 400 thermal power plants.

The report said that by using right infrastructure power costs to power plants could be cut by 50 paisa.

“Since logistics contribute 30 to 35 per cent of the cost of power generation, this initiative will also directly cut power costs by 50 paisa per unit for coastal power plants fed coal coastally,” it said.

The report also said that coastal movement of coal could save 1 lakh rail-rake days that can be used for other commodities.

“Analysis reveals potential for transportation of thermal coal for 11 power plants with capacity of 12 GW on the NW-1 system. Estimated potential of 20 to 25 million tonnes of coal traffic by year 2025,” it said.

Also, there is potential to carry 25-35 MTPA from Talcher/Ib Valley to Paradip port on the NW-5. Additionally, another 70 MTPA of thermal coal for non-power uses can be transported through the coastal route if port based linkages of coal are provided.

Thermal coal alone accounts for around 61 per cent of the freight volume on the Indian Railways and 24 per cent of the seaport freight mix.

The Sagarmala programme aims to change the way logistics evacuation happens in India and save costs nationwide for cargo handled and evacuated through seaports.