CIL has links with 126 coal-based thermal plants, 14 of which spreading over 1,400 km distance are presently eligible for the freight concession, which led to CIL seeking distance based freight concession from railways in a bid to garner more customers under the ambit of the import substitution scheme.
Kolkata, August 13: State-owned Coal India Limited (CIL) stated to have sought from Indian railways, 15% distance-based freight concession for domestic coal transportation to customers located in the region of 701 km – 1,400 km from its mines, in a bid to broaden its client base and bring in more customers under the import substitution plan.
A senior executive of the company said that the extension of freight concession to customers in 701 km – 1,400 km could significantly boost the extraction of domestic coal at a much lower cost in coal conveyance when compared to coal sourced from abroad.
CIL has links with 126 coal-based thermal plants, 14 of which spreading over 1,400 km distance are presently eligible for the freight concession, which led to CIL seeking distance based freight concession from railways in a bid to garner more customers under the ambit of the import substitution scheme, the statement said.
Worth mentioning is the fact that among CIL’s overall supply, close to 70% consists of “G9 to G13” grades of coal, the freight price for which is around 40% – 45 % of the total landing cost at consumption point.
Also, the freight cost climbs up further for distance above 701 km. Providing concession in freight price to customers falling in this range would be beneficial enough for the coal producers to step up domestic supplies that would lead to eventually substituting imported quantities.
As a result, CIL’s coal can compete with the landed price of imported coal then, and customers may choose domestic coal instead of the imported one.
CIL has undertaken this step in view of the recent Railway Board’s decision granting 20% distance-based concession in freight prices for transportation of coal and coke, among other commodities, for distances in exceeding 1,400 km. The company stated that the price of CIL’s coal is considerably lower when compared to the price of imported coal. But other costs and charges like statutory levies and rail freight raises its price and makes the landed cost of its coal less competitive compared to the imported coal, more specifically in the western and southern parts of the country. It’s worth mentioning that Coal India accounts for over 80 per cent of domestic coal output.
