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Power producers seek pool pricing on imported coal

12 Oct 2012 Evaluate

In line with the decision to import coal in order to bridge the supply gap amid stringent availability, the Director-General, Association of Power Producers, Ashok Khurana has sought Coal India (CIL) to pool the price of imported coal with domestic produce, to ensure lifeline to power producers, mainly for those from private sector. While, the board of directors of CIL has strongly opposed the proposal, by reasoning the possible financial risk it has to face, if the existing power sector consumers raise objections against allowing subsidy to newly commissioned generation capacities.

Even though, Khurana has opined that subsidizing the imported coal by taking advantage of the arbitrage opportunity between domestic and imported coal, is inevitable to make the proposition economically viable. He also cautioned that India is likely to face a shortfall of about 200 million tonne of coal by the end of the current Plan period (2012-17).

Malay De, Principal Secretary, West Bengal Power Department, has countered Khurana stating that cross-subsidizing a segment of coal consumers is against the principles of market economy that opened doors to private producers to invest in the power generation sector. He also criticized the private power producers for seeking relaxation during the fixed tariff regime of 25 years.

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