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Power Min sends comments on price pooling to Coal Ministry

31 Jan 2013 Evaluate

With regard to the pooling of coal prices, the power ministry has suggested to the Coal Ministry that the difference in cost of imported and domestic coal should be added to the cost of indigenous fuel at the time of finalising proposal for pooling coal prices. Ministry of Coal is preparing a cabinet note on the coal prices proposal, to be floated at the earliest.

The power ministry has sent its proposal after consultation with the Central Electricity Authority (CEA). Meanwhile, as per the CEA, the difference in price of the imported and domestic coal would be transferred on to the cost of domestic coal as imported coal is approximately priced at Rs 6,000 per tonne and domestic coal at Rs 4,500 per tonne.

Further it said that the approximate difference of Rs 1,500 per tonne would be multiplied by the total quantity of coal to be imported, including the cost of transportation, and the entire sum would be divided on the basis of quality of coal to the power stations.

Moreover, CEA has suggested that the pithead-based stations or stations which are near the mines will get domestic coal to meet 80 per cent of the quantity Coal India is mandated to supply and the coal earmarked for old power plants that are coastal would be forwarded to pithead plants. The CEA has also suggested that top quality coal would be exempted from such an arrangement.

Earlier, Coal India had said that price pooling was a mechanism to implement fuel supply agreement (FSA) and if price pooling is approved then 15 percent supply of imported coal 'will be not in the cost plus method, but in pooling mechanism'. Coal India board had earlier approved the modified FSA without price-pooling with 65 percent domestic coal and 15 percent imported coal at cost plus basis.

Till now, 48 companies have entered into fuel supply pacts with Coal India for receiving the fuel. According to the FSA, Coal India has to provide an assured supply of minimum 80 percent of the total quantity, if failing to which would be penalized.

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