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Private power plants can bid for coal with states

The move aims to enhance the efficiency in utilisation of domestic coal.

By: ENS Economic Bureau | New Delhi |
Updated: June 18, 2020 3:05:58 pm
coal, coal plant, power plant, private plant, coal power plant, illegal mining, coal mining, india news, latest news The move is in sync with the government’s earlier initiative of making the utilisation of domestic coal more flexible, wherein the fuel would be allotted to the power plants based on efficiency.

Private power plants can now procure coal from state governments’ coal reserve, which is allocated for power production. The move aims to enhance the efficiency in utilisation of domestic coal. Under the arrangement, the state supplying coal will invite tariff bids from the prospective independent power generating stations for domestic coal. The move is in sync with the government’s earlier initiative of making the utilisation of domestic coal more flexible, wherein the fuel would be allotted to the power plants based on efficiency.

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Currently, some efficient power stations are facing coal shortage while there are plants with low utilisation possessing abundant fuel. Under the new norms, the landed cost of power from the private power station should be lower than the variable cost of generation of the generating plant of the state, whose power is to be replaced by the private plant. The landed cost of power would be inclusive of the transmission charges.

It also said that if the railways finds that transfer of coal to a private power station is not feasible, then that plant would not be eligible to participate in bidding.

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While making an earlier announcement on the relaxation of domestic coal usage norms on May 4 last year, power minister Piyush Goyal had said that the process could result in bringing down cost of power by Rs 0.40 to Rs 0.50 per unit, which could lead to savings of Rs 25,000 crore to Rs 30,000 crore per year.

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