The Coal Ministry is actively working on mitigating road congestion in the country’s coal producing regions. Their focus is on developing coastal shipping as a viable and cost-effective alternative to transport 112 million tonnes (mt) of coal by 2030. To achieve this, an Inter-Ministerial Committee, led by Additional Secretary M Nagaraju and involving the Ministries of Power, Railways, Ports, Shipping & Waterways, is crafting a comprehensive roadmap for coal transportation.
The committee has put forth a range of recommendations to bolster the R-S-R (Rail-Sea-Rail) route, aiming to elevate the coal evacuation capacity from the current 40 mt to the target 112 mt by 2030. This approach brings several advantages. Firstly, it alleviates congestion on the All-Rail Route (ARR) by introducing an additional evacuation channel. Secondly, it establishes opportunities for future exports by enhancing infrastructure. Lastly, the R-S-R method significantly reduces carbon emissions compared to the traditional ARR.
According to Crisil, the cost of transporting coal makes up a substantial portion (25-35%) of the power production expenses for plants situated around 1,000 km away from the coal source.
Presently, most coastal coal shipping occurs from the Mahanadi Coalfields’ talcher mines, operated by Coal India (CIL) subsidiary. These shipments are directed via Paradip and Dhamra ports in Odisha to thermal power plants (TPPs) in Karnataka, Andhra Pradesh, and Tamil Nadu. During the fiscal year FY23, the coastal thermal coal traffic reached 42.2 mt, showing a 50% increase from the 28 mt in FY22.
India’s major power generator, NTPC, is leveraging the R-S-R route to supply coal to TPPs in various states. The overall coal transportation requirement for these TPPs, including those sourced from MCL and South Eastern Coalfields (SECL), is around 9 mt.
Coastal shipping, being a cost-effective and environmentally friendly transportation mode, has the potential to transform India’s logistics sector. The ongoing initiatives to enhance coal evacuation, particularly the RS/RSR approach, aim to optimize the capacity utilization of ports along the Southern and Western coasts. This will facilitate efficient coal transportation to power plants in Gujarat, Maharashtra, Karnataka, Goa, Tamil Nadu, Kerala, and Andhra Pradesh.
Opting for the R-S-R route could result in substantial savings of ₹760-1,300 per tonne in logistics costs for end users in Southern India. Although the cost of coal supply from MCL (Paradip) to Western and Northern TPPs increases by about Rs 2,500 per tonne compared to ARR, it remains more economical than the total cost of imported coal.
In terms of electricity generation costs, using RSR coal brings a difference of around ₹1.5-2 per unit compared to imported coal. According to a January 2018 Crisil report, savings could be as high as 50-60% for plants located near ports in Tamil Nadu or Andhra Pradesh, sourcing coal from Odisha mines via a 45,000 dwt vessel. Even for plants 200-400 km inland, the savings are notable, ranging from 10-20%, accounting for rail connectivity to/from the loading/unloading port.