India’s largest power generation company NTPC Limited has for the first time started buying coal from privately owned commercial mines in the country. Till now, NTPC used to buy domestic coal only from government-run Coal India Limited (CIL), which was purchased under Long Term Fuel Supply Agreement (FSA). Senior company officials said NTPC has issued tenders to purchase 30 lakh tonnes of coal from private mining companies in the last six months and its supply has already started.
A company official said, ‘We are getting coal from commercial mines. Coal is being supplied directly to our plant from these mines. This tender was for non-pithead power plants of NTPC. Non-pithead power plants are more than 500 kilometers away from coal mines, while pithead power plants are closer to the mines. Officials said buying coal from private commercial mines is slightly costlier than Coal India’s coal, but cheaper than imported coal.
Apart from procuring coal from CIL, NTPC also imports high quality coal. Especially this import is from Indonesia. It is mixed with domestic coal and compensates for the shortage of coal received from CIL. Imported coal constitutes 8 to 10 percent of NTPC’s total coal demand.
A senior official said that we have set a target that soon we will start buying domestic commercial coal instead of imported coal. We have set a target of reducing coal imports to zero in the near future. NTPC currently passes the entire cost of power generation on the power supply rate. Company officials told Business Standard that the overall impact on costs would be marginal.
“Coal from these private mines is being transported directly to our plants,” the official said. This is in addition to CIL’s supply of coal, which generally has to be lifted from rail sidings. For this we often have to resort to transportation by road. The increased cost of commercial coal also includes the cost of transportation, which is borne by the mining company. Direct delivery is both cost-wise and environmentally sound.
First Published – April 13, 2025 | 10:39 PM IST
