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CCEA to discuss coal price pooling proposal this week

04 Feb 2013 Evaluate

The Cabinet Committee on Economic Affairs (CCEA) in its meeting scheduled to be held this week, is likely to discuss upon the government note on pooling the price of coal - blending the cost of domestic fossil fuel with the imported one.

A couple of days ago the Coal Ministry had circulated a Cabinet note on price pooling, inviting comments from various ministries -- Power, Steel, Shipping, Railways and Planning Commission among others. The Power Ministry, after consultation with the Central Electricity Authority (CEA), suggested to the Coal Ministry that the difference in the cost of imported and domestic coal should be added to the cost of indigenous fuel at the time of finalizing proposal for pooling coal prices. Meanwhile, Planning Commission suggested Coal India (CIL), to offset the impact of high import costs by adopting a pooling formula on prices by combining rates of imported and domestic coal.

According to the Central Electricity Authority’s (CEA) recommendations, the difference in price of the imported and domestic coal would be transferred on to the cost of domestic coal. Imported coal is approximately priced at Rs 6,000 per tonne and domestic coal at Rs 4,500 per tonne. The approximate difference of Rs 1,500 per tonne, as per the suggestion, should 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.

However, several state governments, including West Bengal and Odisha, have opposed CEA’s proposal. Odisha government objected to the proposal stating saying it wasn’s relevant to the power generating companies located very close to coal mines, likewise, West Bengal government raising objections to price-pooling,  conveyed to CIL that such a mechanism was not acceptable.

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