Coal India has urged Indian Railways to offer it a 15 per cent freight concession to transport domestic coal for a distance of 701-1400 kilometres (km) from its mines.

In June, the Railway Board had decided to grant a 20 per cent concession on freight price for a distance of more than 1400 km on the transportation of coal.

The concession is on normal tariff rates, provided that after applying the concession, the freight price should not be less than the tariff rate for a distance up to 1400 km. This concession is valid from July 2020 to June 30, 2021.

But Coal India officials on Wednesday said that there was a case for widening the scope of concession as only a handful of consumers in the power sector, which constitutes the bulk of the public sector miner’s offtake, are eligible to get the benefits.

Of the 126 coal-based thermal power plants linked to Coal India, 14 plants located beyond 1400 km are eligible for freight concession at present.

Moreover, these plants have supply contracts of only 42 million tonnes of coal per annum. Six non-power consumers who would benefit from the present concession have annual coal contracts of 1.37 mt per annum.

Once the concession is extended, it will boost Coal India’s offtake, which has been hit by the Covid-19 pandemic, and also encourage import substitution. “Extension of freight concession to customers located in the range of 701-1400 km could result in substantial domestic coal lifted by them in place of coal sourced from abroad due to lesser cost of coal conveyance,” said a senior Coal India executive.