Coal India asks states to respond on price-pooling mechanism

Racing against the month-end deadline to ink the fuel supply pacts, Coal India (CIL) has shot off reminder letters to the state governments seeking their views on price-pooling mechanism.

“A couple of days back CIL sent reminders to almost all the state governments asking them to give their opinion on price pooling of coal,” a CIL official said today. “We had to send reminders to the state governments as barring West Bengal no other state government sent us their opinion on the same,” the official said.

In September, CIL had asked the state governments to convey their views on price pooling of coal. West Bengal government only responded to the coal PSU and raised its objections to price-pooling of coal.

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To offset the impact of high import costs, the Planning Commission had said that CIL should adopt a pooling formula on prices by combining rates of imported and domestic coal.

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