In a bid to alleviate road congestion in the coal-producing regions of the country, the Coal Ministry is developing coastal shipping as a cost-effective alternative, with the aim of supplying 112 million tonnes (mt) of coal by 2030.

To accomplish this goal, the Ministry has formed an Inter-Ministerial Committee (IMC), led by Additional Secretary M Nagaraju, in collaboration with the Ministries of Power, Railways, and Ports, Shipping & Waterways. The committee's objective is to devise a long-term roadmap for coal transportation in the country.

The IMC has proposed a series of measures to promote the Rail-Sea-Rail (R-S-R) route for coal evacuation, targeting an increase from the current 40 mt to 112 mt by 2030. This strategy offers various advantages: it can alleviate congestion on the All-Rail Route (ARR) by providing an alternative evacuation method, create export opportunities by establishing infrastructure for potential exports, and notably, the R-S-R route has a significantly lower carbon footprint compared to ARR.

Transportation expenses make up 25-35% of the power production cost for a plant situated about 1,000 km away from the coal mine it sources from, according to Crisil.

Currently, most coastal shipping of coal occurs from the Mahanadi Coalfields' (MCL) talcher mines, a subsidiary of Coal India (CIL), through Odisha's Paradip and Dhamra ports to thermal power plants (TPPs) in various states. During FY23, this coastal thermal coal traffic reached 42.2 mt, showing a growth of 50% from 28 mt in FY22.

The R-S-R route is already being utilized by NTPC, India's largest power generator, to supply coal to TPPs in different regions. Coastal shipping has the potential to revolutionize India's logistics industry, and efforts like the R-S-R route aim to fully utilize ports along the Southern and Western coasts for efficient coal transportation to power plants across various states.

Opting for the R-S-R route could lead to significant cost savings for end users in Southern India, potentially saving around ₹760-1,300 per tonne in logistics costs. The difference in power production costs between RSR coal and imported coal is estimated to be around ₹1.5-2 per unit.

A 2018 report by Crisil highlighted potential savings of up to 50-60% for plants near ports in Tamil Nadu or Andhra Pradesh, utilizing the R-S-R route for coal transportation. For plants located further inland, savings might be somewhat less but still significant, especially when considering the use of larger vessels and efficient rail connectivity.