States agree on price pooling of coal

The states have “broadly” agreed on pooling of prices of locally produced and imported coal, a development which would fast-track efforts to import the dry fuel through Coal India to meet the growing domestic demand.

In a letter to Principal Secretary to PMO, Pulok Chatterjee, Power Secretary P Uma Shankar has said, “CEA discussed the issues related to pooling of price of coal and it was observed that there is a broad consensus (among the states) on the proposed strategy of price pooling.”

[caption id=“attachment_393647” align=“alignleft” width=“380”]  Reuters[/caption]

“CEA (Central Electricity Authority) will work out the list of plants keeping in mind the boiler designs,” he said adding that power utilities have insisted on delivery of imported coal at the plant site by Coal India or its agency.

More from Economy

Inflation likely to be a big focus area for budget 2024, say sources Explained: Will the Bank of Japan break tradition and raise interest rates?

In the meeting, the utilities also expressed concern regarding the quality of domestic coal being supplied by Coal India and its subsidiaries.

Shankar also requested Chatterjee to ask Coal India to sign the fuel supply pacts at the 80 percent trigger level and fulfill its obligation through coal import and price pooling to the extend required.

Trigger level is the minimum supply level failing which the supplier is liable for a penalty. Power sector is struggling with fuel shortage mainly due lesser production at Coal India’s end. Last month, in a meeting, Prime Minister’s Office had directed power companies and Coal India to sign Fuel Supply Agreement (FSA) at 65 percent of the total coal contracted.

It had suggested increasing the minimum supply level to 80 percent, gradually in about four years. The Coal Ministry has asked Coal India to consider these suggestions and take appropriate decisions for revision of clauses of the FSAs to be signed with power producers.

The Board of Coal India is likely to meet on 31 July to discuss the matter. The company has set a production target of 464 million tonnes for 2012-13. Coal’s demand-supply gap likely to reach 185 million tonnes (MT) by 2017 against 137 MT at present.

PTI