Moneycontrol
Jun 22, 2013 01:12 PM IST | Source: CNBC-TV18

CCEA okays new coal price model, Neyveli Lignite divestment

The CCEA has deferred decision on natural gas pricing. Early this year, a panel of experts had recommended doubling domestic gas price from about USD 4.2 per mmBtu (metric million British thermal units), with the price to be reviewed on a monthly basis.

CCEA okays new coal price model, Neyveli Lignite divestment

The Cabinet Committee on Economic Affairs (CCEA) has approved coal price pass-through mechanism on Friday, reports CNBC-TV18.


Under the pass-through mechanism, the entire additional cost of imports would be passed on to consumers as against the averaging of prices of imported and domestic coal under the earlier planned price-pooling mechanism.


Earlier, there was a proposal to pool prices of imported and domestic coal to make the fuel affordable to new power plants


Simultaneously, the cabinet also cleared proposal of 5 percent divestment in Tamil Nadu-based Neyveli Lignite, which would help garner around Rs.450 crore to the government.


The cabinet) had earlier put this proposal on back burner but the Department of Disinvestment (DoD) moved the proposal again.


However the CCEA has deferred decision on natural gas pricing.


Early this year, a panel of experts had recommended doubling domestic gas price from about  USD 4.2 per mmBtu (metric million British thermal units), with the price to be reviewed on a monthly basis. However, the oil ministry in its final proposal instead suggested an increase to above USD 6.7 per mmBtu level and has also called for quarterly review. 

The note for the CCEA proposes new gas price between  USD 6.76/mmBtu to USD 8.93/mmBtu in FY14. Further in FY15, it should be at around USD 10.29 and should be raised to USD 10.92 in FY16.

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