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CCEA approves coal price pass-through mechanism for power plants

21 Jun 2013 Evaluate

The Cabinet Committee on Economic Affairs (CCEA) approved coal price pass-through mechanism, under which the entire additional cost of imports would be passed on to the consumers as against the averaging of prices of imported and domestic coal under the earlier planned price-pooling mechanism.

As per the new mechanism, the power plants commissioned after 2009, will source 80% of the coal requirement from Coal India Ltd, which has agreed to supply 65% of the requirement from domestic mines and the rest 15% through imports. The entire cost of imports is proposed to be passed on to the electricity consumers. Further, fuel supply situation and costs would be monitored on a quarterly basis and the power producers would be required to move the regulator for change in tariffs.

Meanwhile, the government had turned down the proposal to pool prices of domestic and imported coal, to make the fuel affordable to new power plants due to sharp opposition to scheme by older power plants and domestic coal producers. They are of the view that proposal will remove the advantage that old power projects enjoyed as compared to newer ones.

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