The Ministries of Power and Coal will deliberate on the “contentious” issue of pooling coal prices at this week’s Cabinet meet.

“Deliberations on pooling of prices...what is feasible and what is not shall be done in the next Cabinet meet,” a Power Ministry official told PTI.

Last week, the Cabinet Committee on Economic Affairs gave in-principle approval to the averaging of prices of domestic and imported coal to get a uniform price of the commodity but asked the Coal and Power Ministries to come back with specifics of the proposal.

Price-pooling

The Prime Minister’s Office had last week directed Coal India Ltd (CIL) and the Central Electricity Authority (CEA) to work on price-pooling to ensure 80 per cent supply to power plants.

However, a final decision on the issue was pending for a long time due to differences between the Coal and Power Ministries on how the cost of higher imported coal will be shared between Coal India and power companies.

Earlier, the Power Ministry had 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 the proposal for pooling coal prices.

Fuel supply pact

Coal India had suggested that price-pooling is a mechanism to implement fuel supply agreement (FSA) that it has to sign with power companies.

The Coal India board had earlier approved the modified FSA without price-pooling for assured supply of 65 per cent through domestic sources and 15 per cent from imports at cost plus basis.

Many state governments fear that price-pooling will lead to increase in electricity tariffs.

(This article was published on February 12, 2013)
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