Karnataka ignores Railway’s advice, misses out on cheap power, sticks to costly coal transport mode

NEW DELHI: Karnataka is missing an opportunity to reduce cost of power by 84 paise per unit by ignoring the Ministry of Railway’s advice to discontinue the practice of transporting half of the coal supplies to Raichur power station by rail-cum-sea route and move the entire fuel supplies by rail.

A note presented at a meeting of officials from pertinent Central ministries, called on Friday to review coal supplies to the state, Karnataka is losing the opportunity to reduce coal cost by Rs 1,200 per tonne by sticking to the rail-cum-sea route even after augmentation of rail capacity.

Chief Minister Siddaramaiah on Friday had sought additional coal from the Centre and urged it to allot a captive mine in Odisha, citing “critical coal supply situation at power stations in Raichur and Bellary districts that supply 70 million units.

Raichur power station is supplied coal from Mahanadi Coalfields Ltd mines in Odisha’s Talcher district. The company also supplies fuel to power stations in other southern states.

Because of limited capacity in southern rail routes, these states were traditionally advised to move part of coal through the costlier rail-cum-sea route, involving movement from Talcher through Paradip and Krishnapatnam ports in Odisha and Andhra Pradesh, respectively.

Under pressure from the Karnataka government for moving 100% supplies through rail, the Railway Board in 2014 relented and agreed to move half the supplies through rail, which is cheaper. After several projects to augment rail capacity in southern states were completed, the Railway Board in August last year told Karnataka and Andhra Pradesh to switch their coal movement completely to the rail mode.

But while Andhra began moving 100% of its coal supplies by rail, Karnataka is still continuing with the rail-cum-sea mode, in spite of reminders at the chief secretary’s level. As a result, central government officials said, the railways is losing annual revenue of Rs 120 crore.

Karnataka government has said power stations in Bellary and Raichur districts are facing shortage and have coal stock of less than a day. Besides Mahanadi Coalfields, Western Coalfields Ltd and Singareni Collieries Company Ltd are the main suppliers.

During the first six months of this fiscal, both Mahanadi Coalfield Ltd and Singareni Coal Collieries Limited have met their supply commitments of 26.70 lakh tonnes, but Western Coalfields Ltd has supplied about 49% of the allocated 11.63 lakh tonne of coal.