Coal swapping to save Rs 6,000 crore: Centre

New Delhi, Dec 11: To improve fuel supplies to power plants, government is working on swapping arrangement of coal which will help save Rs 6,000 crore, government informed Lok Sabha on Wednesday.

Coal and Power Minister Piyush Goyal informed Lok Sabha that coal production has significantly increased in the last few months.

File photo

Replying to questions, he said government was working on an arrangement under which coal blocks will supply fuel to the nearest power plants, under a swapping arrangement to rationalise coal linkages. He explained that since coal blocks mostly have arrangements with power plants located far off, it leads to heavy expenses on carriage. This will be addressed through the swapping arrangements between coal blocks.

Citing an example, he said recently NTPC and Gujarat State Electricity Corp entered into a pact for swapping one million tonnes of coal, which is expected to save over Rs 300 crore for the state government. This experiment will then be expanded to other states, he said, adding it will help save Rs 6,000 crore and benefit consumers.

Separately, he said that as many as 11 public sector banks have more than Rs 51,000 crore worth exposure to various coal linkages. Quoting information received from the Department of Financial Services, Goyal said, "11 banks have exposure to the tune of Rs 51,203.96 crore against coal linkages, 10 banks have no exposure, whereas six banks have not given information."

The minister was replying to a query on whether public sector banks grant credit against coal linkages and their details.

Goyal said the new long term coal linkages or Letter of Assurances have not been granted to any sector since 2010 due to low coal production. According to him, availability of fuel was not sufficient to cater to requirements of linkages granted to all power projects.

"The growth in production of coal in India was only 0.2 % in 2010-11 and 1.3 % in 2011-12 as against 6.1 % in 2007-08, 7.8 % in 2008-09 and 8 % in 2009-10. Hence, the production of coal in the country was not commensurate with the projections of its availability," he said.

Goyal said there were well established procedures for providing coal linkages.

Recently, a case came to government's attention where the shareholding of the company was changed after it received permission for coal linkage. Subsequently, the government has denied the permission to that entity, he said.

He, however, did not give specific details. Responding to another query, Goyal said the larger focus is on providing coal linkages to independent power projects where the electricity tariffs are regulated.

In case of captive power plants, there is no price control and the price is determined by the market.

The minister said no new coal linkage has been given to such plants in recent years due to various factors, including low fuel production.


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