Power Min, CEA need to consult utilities for FSA

The Power Ministry and the sector's planning body Central Electricity Authority may be required to consult power generation utilities for signing Fuel Supply Agreements (FSAs) with Coal India.

"They (Power Ministry and CEA) have to take the utilities' consent for signing the FSAs," a source close to the development said, adding that Coal India has agreed to Central Electricity Authority's (CEA's) formula for pooling coal prices.

The CEA has suggested that coastal plants and power plants which are equidistant from coast and mines should get imported coal.

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.

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

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.

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

Prime Minister's Office (PMO) had asked Coal India and CEA to work out a model for pooling prices of imported and domestic coal in order to break the deadlock over signing of the FSAs by Coal India with power utilities.

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

Cost-plus basis means cost of importing coal by Coal India plus additional charges.