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Impact of coal linkage rationalization on cost efficiency and sustainability

September 1, 2023 6:10 pm

Impact of coal linkage rationalization on cost efficiency and sustainability

The Ministry of Coal has launched a policy project called the Rationalisation of Coal Linkages to shorten the distance that coal must travel from coal mines to users, lowering transportation costs and improving the efficiency of coal-based power generation. The rationalisation of coal links in the power sector has reduced the cost of moving coal from mines to power plants, improving the efficiency of coal-based power generation. The exercise assists in lightening the burden on the transport system, easing evacuation restrictions, and lowering the cost of coal after it has been landed.

On the advice of the Inter-Ministerial Task Force (IMTF), which was established in June 2014, linkage rationalisation for State/Central PSUs was originally implemented. To logically link the Independent Power Producers (IPPs), a new IMTF was established in July 2017. On May 15, 2018, the coal rationalisation approach for IPPs and private sector units was also released. In October 2018, an IMTF was also established to look into the possibilities of further rationalising coal connections, including the idea of substituting domestic coal carried close to coastal areas for imported coal being transported to the hinterland.

Four rounds of linkage rationalisation have been completed thus far, affecting 73 Thermal Power Plants (TPPs), of which 58 are owned by State/Central GENCOs and 15 are owned by IPPs. With a potential yearly saving of about ₹6420 crores, the rationalisation of linking has led to the rationalisation of a total of 92.16 million tonnes (MT) of coal.

Coal India Limited has made a key step by requesting expressions of interest (E.O.I.) from both independent power producers (IPPs) and generating companies (GENCOs) as part of the Ministry of Coal’s holistic plan for the rationalisation of coal linkages. This forward-thinking legislation seeks to significantly lower transportation costs, which will lower fuel costs and provide real advantages to consumers.

Coal PSUs are rationalising coal linkage in order to increase operational effectiveness, save costs, and promote a more sustainable energy ecosystem. This strategy reflects our dedication to striking a balance between environmental sensitivity and economic prosperity. An efficient, affordable, and environmentally responsible future is being shaped by the Ministry of Coal’s creative policy effort.

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