Power Ministry sends comments on coal price pooling to Coal Ministry

Power Ministry sends comments on coal price pooling to Coal Ministry

The Power Ministry has suggested to the Coal Ministry that the difference in cost of imported and domestic coal should be added to the cost of indigenous fuel at the time of finalising proposal for pooling coal prices.

The ministry has conveyed its comments on pooling of coal prices to the Ministry of Coal, which is preparing a Cabinet note on the proposal, to be floated at the earliest.

"The ministry has sent its proposal after consultation with the Central Electricity Authority (CEA)," a Power Ministry official told PTI.

Last month, Power Minister Jyotiraditya Scindia had said that a joint policy by Power and Coal Ministries on pooling of prices would be formulated.

Both the ministries had said that they would work out a mechanism for coal prices to mitigate the impact of costlier imported coal for the generation companies.

According to CEA's recommendations, the difference in price of the imported and domestic coal would be transfered on to the cost of domestic coal. Imported coal is approximately priced at Rs 6,000 per tonne and domestic coal at Rs 4,500 per tonne.

The approximate difference of Rs 1,500 per tonne would be multiplied by the total quantity of coal to be imported, including the cost of transportation, and the entire sum would be divided on the basis of quality of coal to the power stations.

CEA has also said that the coastal plants and power plants which are equidistant from coast and mines should get imported coal.

It has said that the pithead-based stations or stations which are near the mines will get domestic coal to meet 80 per cent of the quantity Coal India is mandated to supply.

It also suggested that the coal earmarked for old power plants that are coastal would be forwarded to pithead plants.

The CEA has also suggested that top quality coal would be exempted from such an arrangement.

Coal India had earlier said that price pooling was a mechanism to implement fuel supply agreement (FSA). If price pooling is approved then 15 per cent supply of imported coal "will be not in the cost plus method, but in pooling mechanism".

Coal India board had earlier approved the modified FSA without price-pooling with 65 per cent domestic coal and 15 per cent imported coal at cost plus basis.

So far, 48 companies have entered into fuel supply pacts with Coal India for receiving the fuel.

As per the FSA, Coal India has to provide an assured supply of minimum 80 per cent of the total quantity failing which it would be penalised.