Price pooling must be adopted for fuel supply, says Montek

Planning Commission Deputy Chairman Montek Singh Ahluwalia today said the price-pooling mechanism should be adopted for fuel supply to power firms but solution to some of the issues involved could take some time.

“We must move to system of price pooling for fuel,” Ahluwalia said addressing the India Energy Forum. He said efforts for price pooling are underway and “I am told it would be done by the end of this year. “…as far as gas pooling is concerned easy solution is price pooling. But the problem with gas price pooling is that gas also goes to fertiliser… I don’t think that in the next 3-4 years these issues can be solved.”

[caption id=“attachment_517840” align=“alignleft” width=“380”] West Bengal government responded to the coal PSU and raised objections to price-pooling of coal. Reuters[/caption]

To offset the impact of high import costs, the Planning Commission had said that Coal India Ltd should adopt a pooling formula on prices by combining rates of imported and domestic coal. In September, CIL had asked the state governments to convey their views on price pooling of coal.

West Bengal government responded to the coal PSU and raised objections to price-pooling of coal. Racing against the month-end deadline to ink the fuel supply pacts, CIL has shot off reminder letters to state governments seeking their views on price-pooling mechanism.

The CIL board had earlier approved the modified fuel supply agreement (FSA) without price-pooling with 65 percent domestic coal and 15 percent imported coal at cost plus basis.

So far, only 30 power companies, including Lanco and Adani have signed FSAs with CIL.

The coal major had earlier said that if price pooling was implemented, all the power consumers would have to bear the impact. CIL had earlier said: “Price pooling is a mechanism to implement FSA…If price pooling is approved then 15 percent supply of imported coal will be not in the cost plus method, but in pooling mechanism”.

Last month, the Prime Minister’s Office (PMO) had asked power companies to sign the FSAs with CIL by November-end even if they don’t have binding pacts for sale of electricity.

PTI