Production cost of electricity will be cheaper by 74 paise per unit once the Bengal government starts mining coal from the proposed Deocha-Panchami project in Birbhum, an initial study by Nabanna has revealed.
The government plans to transfer this saving to power consumers directly, sources at Nabanna said.
“Production cost of electricity will be cut down by 74 paise for each unit of electricity once we start using cent per cent captive coal.… The benefit will be transferred directly to consumers,” said a senior state government official.
Though a section of officials said it was too premature to comment that power tariff would come down in proportion to the lower production cost, they agreed it would definitely make electricity cheaper for consumers in Bengal.
Nabanna sources said that now the production cost of one unit of electricity was Rs 3. “The cost is higher as the state has to buy 20,000 tonnes of coal every day out of its daily need of 55,000 tonnes. The state is forced to buy coal at Rs 3,000-Rs 3,800 a tonne every day,” a source explained.
In case of captive coal — where the state mines coal on its own — the cost of a tonne is around Rs 2,200.
“We can save Rs 1,000 on an average for each tonne of coal once we start mining from Deocha-Panchami. It has been estimated that this will help the state cut the production cost of each unit of electricity by 74 paise,” said a bureaucrat.
Sources said that the West Bengal Power Development Corporation Limited (WBPDCL) sold each unit of electricity at Rs 3.40 to the West Bengal State Electricity Distribution Company Limited ( WBSEDCL).
“In turn, the WBSEDCL sells each unit of power to consumers at a little over Rs 7 as it adds administrative and distribution cost to the base price. If the production cost falls by 74 paise, it would be a huge benefit for the consumers,” another official said.
A drop by 74 paise in each unit of power could be huge as those using up to 300 units could save up to Rs 225 a month, a significant sum in rural areas, an official pointed out.
Some officials, however, were cautious.
One said power generation companies might have to install costly technologies in their plants to make them environment friendly, so it can’t be definitely said right away how much of the cost benefit would finally reach the end-consumer. “The way the need to reduce use of fossil fuel was discussed earlier this month at the COP26 climate change meeting in Glasgow, it is evident that the thermal power plants in India may have to be overhauled to make them environment friendly. As this would involve a huge investment, the power generation company in Bengal may have to use a part of the amount saved from production cost to acquire technology that reduces carbon emission. But overall, power tariff would definitely be cheaper if the state uses cent per cent captive coal,” said an official.
Another said the cost of petro products would also have a bearing on the production cost of power.
“If the price of petro products goes up, the savings on production cost may vary. But as coal is the main component, power production cost is likely to drop once the state only uses captive coal,” said a source.
The sources said that in addition to cheaper power tariff for consumers, the proposed mega mining project would help the state generate more than 1 lakh direct and indirect jobs and also help it earn surplus revenue from the sale of coal.
“The first phase of the project, to be started at Dewanganj-Harinsingha where the state has significant quantum of land, has a coal reserve of 38.69 million tonnes. This is huge. The state can earn a handsome revenue by selling surplus coal every year,” said an official.