Oct 3, 2016

Power Cos worried over Railway’s decision to levy Coal Terminal surcharge

Indian Railways, in a recent move, rationalised coal tariff by reducing the rate for long-distance transportation and increasing it for short distance while imposing Rs 110 per ton coal terminal surcharge at loading and unloading points for distance beyond 100 km.
New Delhi: Indian Railways’ decision to levy coal terminal surcharge at both loading and unloading ends for power companies located beyond 100 km of coal mines has hit private power players more than state-owned generators, power producers said.

Experts say only 15% of this increased cost can be passed on to consumers, while the rest has to be absorbed by companies, pressurising their already tight margins.

Power generation costs as a result of this levy are estimated to go up by 8 paisa per unit.

“A large number of private companies are located beyond 100 kilometres of coal mines and it has increased their power generation costs at a time when power is surplus,” said Ashok Khurana of Association of Power Producers.

Power companies moving coal over 150 km are incurring Rs 110 per tonne rise in coal transportation costs, said Jayanta Roy, senior vice president at ICRA. For a 1,000 mw power plant operating at 80% capacity utilisation, input costs would go up by about Rs 55 crore a year. They would be incurring an additional Rs 200 per tonne, including VAT and duties.

“This year, the Central Electricity Authority has allowed passing on only about 6.1% of the transport costs to consumers. Going by the calculation, power companies can pass on only Rs 30 per tonne of coal while they have been incurring an additional `200 per tonne rise in transport costs – only about 15% of the increased cost can be thus be passed on,” said Roy.

Coal Consumers’ Association has made several representations to the government. Its secretary general Subhasri Chaudhuri said, “Loading and unloading terminals are mostly equipped and manned by buyers and hence there is no rationalisation in levying such charges. Further, traffic freight changes have increased freight anything between 9% and 41% for distances of 300 km-1,000 km.”

Industry analysts say majority of thermal power plants of the central generating companies’ are located at distances less than 100 km. A large number of these plants either have their own conveyor belts and rail links or they transport the coal on trucks for such short distances.

“Private companies such as Adani Power, RattanIndia Power, Bajaj Energy, Sembcorp and GMR Power have plants beyond 100 km, while NTPC has plants within 100 km distance,” said a power sector analyst.

Adani’s plants in Tiroda and Kawai, GMR’s plants in Warora and Chattisgarh, Hinduja Power’s plant and Reliance Power’s Rosa plant are all located beyond 100 km of coal mines.