New Delhi, August 25

In an effort to reduce road congestion in the coal producing belts in the country, the Coal Ministry is developing coastal shipping as a cost-effective alternative aiming to supply 112 million tonnes (mt) of the key commodity by 2030.

The Ministry has constituted an Inter-Ministerial Committee (IMC), chaired by Additional Secretary M Nagaraju, with Ministries of Power, Railways and Ports, Shipping & Waterways to conceptualise a long-term road map for coal movement in the country.

The committee recommended several measures to promote the R-S-R route for evacuation of coal to reach 112 mt by 2030, from the existing 40 mt.

This strategy offers many benefits. First, it is likely to reduce congestion on the All-Rail Route (ARR) by providing an additional alternative mode for evacuation. Second, it creates export opportunities by building infrastructure that can be utilised for exports in the future and lastly, RSR has significantly lower carbon footprint compared to ARR, the ministry said.

According to Crisil, transportation costs account for 25-35 per cent of the cost of power produced by a plant located around 1,000 km from the mine where it sources coal.

Coastal coal traffic

At present, the bulk of coastal shipping of the dry fuel happens from Coal India (CIL) subsidiary, Mahanadi Coalfields’ (MCL) talcher mines, through Odisha’s Paradip and Dhamra ports to thermal power plants (TPPs) in Karnataka, Andhra Pradesh and Tamil Nadu.

During FY23, it handled 42.2 mt of coastal thermal coal, registering a growth of 50 per cent over 28 mt in FY22.

India’s largest power generator, NTPC is using the R-S-R route to supply coal to TPPs at Kudagi (Karnataka), Dadri (Uttar Pradesh), Jhajjar (Haryana) and Unchahar (Uttar Pradesh).

Sources said the total quantity to be transported from coal blocks including MCL and South Eastern Coalfields (SECL) to these TPPs is around 9 mt.

Transportation costs

Coastal shipping, which is an economical and eco-friendly mode for moving goods, has the potential to revolutionize India’s logistics industry. The ongoing efforts to augment coal evacuation such as RS/RSR, strives to achieve full capacity utilization of the ports along the Southern and Western coasts.

This will enable efficient transportation of more coal to power houses in Gujarat, Maharashtra, Karnataka, Goa, Tamil Nadu, Kerala, and Andhra Pradesh.

“Opting for R-S-R route could potentially save around ₹760-1,300 per tonne in logistics costs for end users located in Southern India. Presently, for supply of coal from MCL (Paradip) to Western and Northern TPPs, the total cost increases by around Rs 2,500 per tonne over ARR but still it is cheaper than the total landed cost of imported coal,” Coal Ministry said.

The difference per unit for power produced exclusively from RSR coal and imported coal is around ₹1.5-2 per unit.

In a January 2018 report, Crisil estimated that savings can be as much as 50-60 per cent for a plant located near a port in Tamil Nadu or Andhra Pradesh sourcing coal from a mine in Odisha using a 45,000 dwt vessel. Savings can increase if a larger vessel is used.

For a plant located 200-400 km inland, the savings would be less, though still significant, at 10-20 per cent, factoring the first- and last-mile connectivity by rail to/from the loading/unloading port.

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