CCEA may discuss coal price pass-through mechanism tomorrow

The Cabinet Committee on Economic Affairs (CCEA) may take a call on coal price pass-through mechanism on Friday."The CCEA may take a call on coal price pass-through mechanism on Friday," a top coal ministry official said.

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

The government had buried a proposal to pool prices of imported and domestic coal to make the fuel affordable to new power plants, owing to sharp opposition to the scheme.

The government is mulling import of the fuel as Coal India Ltd (CIL) will supply 65 per cent of the requirement from domestic sources and another 15 per cent can be provided from overseas market.

Power minister Jyotiraditya Scindia had said last month that pass-through mechanism for supply of coal was ready. Earlier, the government issued a Presidential Directive to CIL to sign fuel supply agreements (FSAs) with the power producers assuring them of at least 80 per cent of the committed coal delivery.

So far 62 FSAs have already been executed. Of the 69 power plants which are yet to enter into fuel supply pacts with state-run CIL, 29 cases belong to NTPC  and its joint ventures.

The power plants of NTPC and its joint ventures (JVs) which have not signed FSAs include Dadri, Korba, Farakka, Simhadri, Bhilai JV and Sipat. Though these power plants of the power PSU have not signed pacts with CIL, most of them are drawing coal under MoU (memorandum of understanding), the ministry said.

NTPC has not entered into FSA with CIL as it had raised concerns about quality of coal being supplied to its power plants.