The ‘in-principle’ approval by the Cabinet Committee on Economic Affairs for pooling domestic and imported coal prices has not gone down well with at least four coal-bearing States.

While West Bengal and Odisha were vocal against the proposal from the word go, Chhattisgarh Chief Minister Raman Singh demanded that State and Central power utilities located in Chhattisgarh be kept out of the purview of this initiative.

Singh was clear that the proposal, if implemented, would act as a disincentive for coal-bearing States to pave way for growth in coal mining.

According to Aman Singh, Special Secretary to the Chhattisgarh Chief Minister, a communication in this regard was already sent to Union Power Minister Veerappa Moily.

“We are opposing this decision,” Odisha’s Energy Minister Arun Kumar Sahoo told Business Line. When asked if the State would consider legal options to stall the move, Sahoo replied, “We will consider all options.”

Senior officials in the West Bengal Government made it clear that the State would explore every means to stop this move. All the generation utilities in the State, including the private (CESC Ltd) and the Government, entered fuel pacts before April 2009.

Accordingly, West Bengal (and its one crore electricity consumers) will only end up subsidising power plants in other parts of the country if “price pooling” is effected. Moreover, State utilities will have to import coal separately for older units, not covered under the pooling mechanism.

Even Congress-ruled Andhra Pradesh has opposed the pooling proposal. The State, like Chhattisgarh, is also demanding the State and Central utilities (from which it draws power) be excluded from the pooling proposal.

“This proposal will severely distort the cost calculus of different plants,” a state official told Business Line. The State Government made its objections clear at the Power Ministers conference in Delhi on February 5, a day before the Cabinet Committee okayed the proposal.

(This article was published on February 9, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.