Coal India subsidiary Mahanadi Coalfields and state government-owned Odisha Coal and Power Limited has signed a memorandum of understanding whereby the former would be sourcing around 6000 tonnes of coal per day from the captive block allocated to the latter. MCL in turn would sell the coal to its customers.

This first-of-its-kind move comes at a time when the government is looking to figure out the issues affecting coal production from captive sources despite undertaking both auction and allocation.

Manoharpur and the dip side of Manoharpur coal blocks with a production capacity of 8 million tonnes per annum were allocated to OCPL in August 2015 to supply coal to IB thermal power plant owned by Odisha Power Generation Corporation. Though production from the block has started, coal could not be supplied to the plant because of evacuation bottlenecks forcing OCPL to stop production.

“The advantage of this is two-fold. It would help OCPL to lower its stock pile and sell coal and the company can continue production from the block. From Coal India’s perspective, this excess coal helps in enhancing coal supplies to its consumers,” said a Coal India official.

MCL would continue to supply OPGC under bridge linkage to help them generate power. The coal requirement through linkage is around 4.8 mtpa.

Primarily coal produced from blocks allocated by the government is for captive consumption in designated end use power plants. But, in a situation where the coal produced at the captive block exceeds the requirement of the end use power plant, there is a provision in the Coal Mines Development and Production agreement to supply excess coal to Coal India.