Inspired by higher production, Western Coalfields Ltd (WCL), a subsidiary of Coal India Ltd, has decided to offer additional quantum of coal to power generators, and that too, at a lower landed price.
This move by WCL will help power generation companies of central, western and southern India to reduce their power tariff, and also cut down the quantum of coal imports, thereby contributing to the interest of the nation.
WCL has the advantage of having its mining operation in central India. This helps consumers of central, west and south India to get cheaper landed coal due to advantage in lesser railway freight in comparison to other subsidiaries of Coal India Ltd (CIL), located in eastern India.
WCL is expected to start dispatching the additional coal by October 2020.
The rationale
With advantage of location, supplemented by phenomenal growth in production, WCL has offered 20-25 million tonnes of coal to state generation companies, NTPC and other IPPs by swapping their linkage from other coal companies. This will be in addition to their existing linkage quantity with WCL.
In a series of recently-held detailed discussions between WCL and state gencos of Maharashtra, Madhya Pradesh, Karnataka, Gujarat followed by NTPC and IPPs, all parameters of existing linkage and future swapping have been discussed along with financial benefit to gencos.
Efforts will be made to complete the swapping procedure at the earliest so that WCL may start dispatching the additional quantity by October 2020. The additional quantity offered for swapping ranges from 3-6 million tonnes to different gencos depending on their requirement. The quantity will further increase in future subject to availability of more surplus coal.
From a low of 39 million tonnes in FY14, WCL’s coal production touched 58 million tonnes in FY20.
WCL’s turnaround
It may be recalled that WCL’s coal production had touched a low of 39 million tonnes during FY14. Coal consumers of WCL had no option, but to take coal from other CIL subsidiaries of CIL like South Eastern Coalfields, Mahanadi Coalfields and also from Singareni Colleries Company Ltd (SCCL).
Due to longer distance, consumers had to pay more on railway freight making landed price of coal higher. However, WCL commissioned 20 projects in the last six years, which contributed 36 million tones of coal production in FY20. With the result, WCL could produce about 58 million tonnes of coal during FY20 despite losing 22 million tonnes of production due to exhaustion of reserves, during the last six years.
WCL is aiming at a production level of 75 million tonnes in FY24.
Aiming higher
WCL has now planned to open another 20 projects to take the production level to 75 million tonnes by FY24 and further to 100 million tonnes by FY27. With substantial growth in coal production, WCL has now sufficient coal to offer to its nearby consumers at a cheaper landed price.
