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Corporate Nov 26, 2012

CIL, CEA reworking coal price pooling mechanism: govt

New Delhi: The government today said Coal India and Central Electricity Authority (CEA) are reworking the coal price pooling mechanism and will submit the revised scheme to the power ministry for consideration.

"CEA and CIL are jointly reworking the scheme of price pooling and will submit to the Ministry of Power for consideration," Minister of State for Coal Pratik Prakashbapu Patil said in a written reply to the Rajya Sabha.

Coal problem. Getty Images

Patil said the government would formulate its views upon the receipt of the revised scheme.

The Planning Commission had earlier said that to offset the impact of high import costs, Coal India (CIL) should adopt a pooling formula on prices by combining rates of imported and domestic coal.

Planning Commission Deputy Chairman Montek Singh Ahluwalia had said that the price-pooling mechanism should be adopted for fuel supply to power firms but solution to some of the issues involved could take some time.

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

In September, CIL had asked the state governments to convey their views on price pooling of coal. West Bengal government responded to the coal PSU and raised objections to price-pooling of coal. Racing against the month-end deadline to ink the fuel supply pacts, CIL has shot off reminder letters to state governments seeking their views on price-pooling mechanism.

The CIL board had earlier approved the modified FSA without price-pooling with 65 percent domestic coal and 15 percent imported coal at cost plus basis.

So far, only 30 power companies, including Lanco and Adani have signed FSAs with CIL.

PTI


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