Modi Government’s Coal Reforms Are Reducing Power Costs

The reforms launched by the Narendra Modi government in the Coal sector are beginning to pay.

According to a report in the Times of India, the initiatives to improve the quality of coal and efficiency in the supply chain have brought down the cost of power from coal-fired plants. This is despite the revisions in coal prices, central cess and railway freight in the last three years.

There is also import substitution worth Rs 23,349 crore, which saves fuel costs.

According to government data, power stations are now burning eight per cent less coal than they used to three years ago for each unit of electricity.

State-run NTPC, which accounts for 17 per cent of all generation capacity in the country, and is the key supplier to states, reduced its coal consumption by 5.5 per cent in 2016-17.

Since cost of coal makes up 54-60 per cent of the price charged by power producers and is passed on to consumers, coal consumption has a bearing on tariffs and environmental dividend in terms of emissions.