India may allow power companies to switch their coal supplies to drastically reduce transportation costs, according to The Economic Times. The government is likely to let companies reach mutually beneficial agreements with help from the coal and power ministries. These agreements will ensure coal is taken to the closest coal-fired power plant instead of traversing the nation.
The government has already identified 21 potential swap proposals, The Economic Times reported. The possible beneficiaries include public and private power plants located in Rajasthan, Haryana, Punjab, Maharashtra, Tamil Nadu and Gujarat. The government anticipates up to $1 billion in savings from reducing coal transportation costs.
Additionally, India appointed KPMG to help assess the proposals and benefits of the swaps.
The motivation to rearrange coal supplies comes from inflated prices, which may be lowered by reduced transportation costs. India is also facing power shortages because companies are reluctant to purchase costly energy supplies.
India needs energy
According to Forbes, 700 million people in India lack modern energy services. The need for electricity is increasing the demand for coal around the country. The nation hopes to utilize cost-efficient coal energy to reduce the amount of electricity shortages that harm the country and to provide energy to a greater number of people.