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Indian Railways prioritises coal supply to power plants

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Dry Bulk,

Piyush Goyal, Minister of Railways of India, recently announced that Indian Railways will prioritise coal supply to thermal power plants, with no advance notice.

On 18 May, the Railway Board notified all zonal railways to prioritise power plants while loading coal. Mahanadi Coal has ordered that “no non-power rakes are to be supplied till further directives.”

Reportedly, coal received by captive power plants (CPPs) has been declining since 2016, despite the fuel supply agreement dictating that 45 million tpy should be provided.

CPP producers, such as the Indian Captive Power Producers Association (ICPPA), are not happy with the decision, and have written to the Minister and the Prime Minister’s Office urging for the resumption of coal supply for CPP sectors.

Rajiv Agarwal, Secretary ICPPA, argued that it “is an unfair discrimination if all coal is going only to the government and private generators. The captive power producers would have to depend imported coal or source power from grid. […] In the last year, captive power producers have been suffering. They are getting 10 - 30% of their coal requirement. We see it as clear discrimination between small and large power plants. It will affect all major sectors, including cement, steel, textile, chemicals and aluminium.”

The country’s coal shortage has causes an increase in spot prices, up to Rs. 10.80 per unit in September 2017.

In October 2017, the Government stated they were addressing the coal-power plant matter. The issue is still ongoing.

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