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Steps to reduce cost of production and import of coal 

  Some of the measures taken to bring down the cost of production by Coal India Limited (CIL) include the following:

  1. e-reverse auction for finalization of contracts for explosives implemented.
  2. Action taken for improving competition in tenders and cost reduction:
  3. In case of procurement, introduction of Reverse Auction (RA) for tenders valued more than 1 crore with Start Bid price as L1-bid
  4. Introduction of rejection of H-1 bid in RA to generate competition and obtain more realistic “Start Bid Price”
  5. Non-disclosure of Bidder’s identity in RA.
  • Staggering the day of rest so that the infrastructure is utilized for higher number of days without affecting the period of rest for an individual.


  1. Adoption of mechanization in both underground and opencast mines.
  2. Converting unsafe, unviable underground mines into opencast mines.
  3. Higher size HEMM to be deployed in major open cast projects for maximum extraction of coal economically.

As per the current import policy, coal is kept under Open General License (OGL) and consumers are free to import coal from the source of their choice as per their contractual prices on payment of applicable duty. However, to reduce import of coal, CIL had taken steps for promotion of import substitution through source rationalization with part supply from higher grade coal sources.  More coal from various sources including higher grade were offered through various types of e- auction schemes particularly special forward e-auction with flexi lifting to cater the requirement of various power sector consumers not having FSA with CIL sources. However, the gap between demand and supply of coal cannot be bridged completely as there is insufficient domestic availability of coking coal and power plants designed on imported coal will continue to import coal for their production.

    An Inter-Ministerial Task Force was constituted in June, 2014 for review of existing coal sources as also feasibility for rationalization of these sources with a view to optimize transportation cost. Coal Linkage rationalization in Power sector has resulted in decrease in transportation cost of coal from the mines to the power plants leading to more efficient coal based generation of Power. Total coal movement rationalization of 54.76 MT has taken place with annual potential savings of Rs. 3354 Crore.

This information was given by the Minister of Railways and Coal Shri Piyush Goyal in a written reply to a question in  Rajya Sabha today.

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