Coal News We love to talk!

JUN 12 2018

Rajasthan has saved over Rs 17,000 crore in coal mining costs

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 12th JUN 2018

 

Even as power producers across the nation continue to complain about inadequate coal supplies, Rajasthan has been taking significant steps in ensuring fuel security to state-owned power projects by roping in a mining developer and operator (MDO) for the Parsa East and Kanta Basan Coal Block at Surguja in Chhattisgarh. This has proved to be a game changer.

The MDO model has kicked up efficiencies within the power sector value chain and kept tariffs under check. More than a decade ago, in 2006, a far-sighted Rajasthan government achieved energy security for the Rajasthan Vidyut Utpadan Nigam Ltd, (RRVUNL), its power generating company, through allocation of captive coal blocks.

In a landmark decision taken then, the state government decided to outsource coal development and operational activity with a focus on delivering affordable and reliable electricity to customers. That decision stemmed from an early realisation of the limited capabilities of state gencos. The need of the hour was to find a stakeholder with astute expertise in coal mining and supply chain management.

In 2007, therefore, the Central Government allotted Parsa East and Kanta Basan (PEKB) coal blocks to RRVUNL to meet its captive coal requirements. A transparent and competitive bidding process followed and eventually the AdGroup was selected for the task.

Despite the usual time lag in ambitious infrastructure projects, the integrated conglomerate developed the block within record time and commenced operation from February 2013. RRVUNL has been getting assured supply and consistent quality of coal from the facilities ever since. This has resulted in unprecedented benefits for the state utility.

It has benefitted immensely from the savings made by in terms of the seamless procurement from its own coal blocks as against depending on Coal India for its supplies. In 2017-18 alone, RRVUNL is estimated to have saved Rs 182 crore in coal cost, which will go up by Rs 300 crore in the current fiscal.

According to government estimates, the utility is projected to save a staggering Rs. 9000 crores during the life time of the coal mine, which reflects immeasurable benefits for the people of Rajasthan. Further consistent and superior quality coal supplied by the Adani Group has helped in cutting down coal consumption at RRVUNL power plants. RRVUNL has been able to save 15 paisa per unit of power generation in the previous fiscal.

Meanwhile, the Chhattisgarh government is projected to earn over Rs.13,000 crores from Parsa East and Kanta Basan coal block in terms of royalties and tax during the mining lease period of 30 years. This includes Rs. 10000 crore to be paid by RRVUNL in royalties and the rest will be in the form of taxes.

The completion of the railway siding connectivity up to the mine site presents added benefits to the power utility, the RRVUNL has confirmed. The MDO model is yet another success story of Public-Private Partnership, a widely established concept globally.

India has made a small start in this direction with this pragmatic decision taken by the Rajasthan government.

Tags

Rajasthan Adani Enterprise Limited Captive Captive Coal Coal Power Generation Energy Security Energy public-private partnership Mine Developer and Operator Coal Block Tax Power Adani Group coal mining Electricity India CAPTIVE

Related News

  • GMR to revamp Rs4,500 crore Odisha plant loan  Read more
  • Uniform consent for coal probe to come up in Centre-state meet today  Read more
  • Cairn Energy tax dispute: I-T dept orders recovery of Rs. 10,247 cr  Read more
  • Ennore Port, Indian Oil to sign deal for LNG plant  Read more
  • Essar Oil to consider delisting on June 23 from BSE and NSE  Read more
  • Deepak Kochhar's NuPower got Mauritius funds in five tranches  Read more
  • Power demand crosses 15,000 MW in T.N.  Read more
  • Changes to Electricity Act: tough task for TSGenco  Read more
  • Nitish pitches for uniform power tariff across the country on lines of rail fare  Read more
  • Thermal power plants under stress on rising coal, freight costs  Read more