With a view to counterbalance the impact of expensive imported fuel on power generation, Power Ministry has okayed the Coal Ministry’s price pooling model proposal for coal to ensure uniformity in the rates of the essential raw material across the country. The model, if given Prime Minister's Office (PMO) nod, would be adopted by the state run Coal India in its board meeting, scheduled to be held on July 31.
According to the model, around 30% of total requirement in imported coal for power plants around the coastal areas will be met, while those within 300 km of the coastline will be supplied with 15% of their total requirement. Meanwhile, rest of the power generators will use 100% domestic coal.
However, once the price pooling model is adopted, power tariffs for plants located in the coastal regions of east are expected to shoot up higher in comparison to the units that are located in west. Although units in the east mostly use domestic coal, they will have to pay more for coal under the price pooling mechanism, which fundamentally means common pricing of similar grade coal. This price is derived by taking the average price of imported and domestic coal. The model proposes that all consumers equally share the common price.
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