CCEA gives in-principle nod to coal price pooling proposal

The Cabinet Committee on Economic Affairs today approved in-principle the averaging of prices of domestic and imported coal to get a uniform feedstock price in the country, but asked coal and power ministries to come back with specifics of the proposal.

"The basic principles and parametres have been identified and now...the real numbers would have to be done in the next couple of days. The decision in principle has been taken (on price pooling). There are certain data which have to put on to these principles," Information and Broadcasting Minister Manish Tewari told reporters here.

He added, however, that "structure of decision has been put in place" and "Coal and Power Ministries will come back (to the CCEA) with the specifics".

Tewari, however, did not spell out any timeline for fixing the specifics of price pooling, but added, "both the ministries have appreciated the urgencies and they would be coming back as quickly as possible".

Prime Minister's Office had directed Coal India Ltd (CIL) and Central Electricity Authority (CEA) last year to work on price-pooling, so as to ensure 80 per cent supplies to power plants.

However, the final decision on the issue was pending for long due to differences between the Coal and Power Ministries on how the impact of higher imported coal prices will be shared between CIL 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 proposal for pooling coal prices.

CIL, on its part, had said that price pooling is a mechanism to implement fuel supply agreement (FSA) that it has to sign with power companies. If price pooling is approved, then 15 per cent supply of imported coal "will be not in the cost plus method, but in pooling mechanism", it had said.

The CIL 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, however, have voiced their opposition to the price pooling issue as they fear that this will lead to increase in electricity tariffs.