GoM set up to resolve price pooling issue

With differences on how to price imported coal unresolved the government has set up a group of ministers to sort it out.

Written by Priyadarshi Siddhanta | New Delhi | Published: April 23, 2013 12:52:40 am

With differences on how to price imported coal unresolved the government has set up a group of ministers to sort it out. A meeting of the cabinet committee on economic affairs chaired by Prime Minister Manmohan Singh on Monday,decided to give the group a time of two weeks to provide a solution. At stake is a progressively rising import of coal to fire 67,000 MW of upcoming power projects.

A government estimate shows these plants need 67 million tonnes of imported coal in 2013-14 and the gap could reach 182 million tonnes by the terminal year of the 12th five year plan,unless domestic capacity expands.

The proposal on the government table says coal imported from abroad has to be sold to power companies on a cost plus basis. This would push up the price of electricity in the country by about 65 paise per unit.

Also it would need a redrawing of the coal policy by the ministry of coal and an acknowledgment by the power ministry of the changes. It would have allowed the electricity regulator to permit raising of prices by the power generation companies.

The Cabinet committee has asked top officials of both the ministries to re-draft certain provisions of the current proposal. Power plants,largely public sector commissioned before March 2009 are exempted from this regime. New plants coming up between April 1 2009 to March 31,2015 would be supplied coal at cost plus prices depending on their willing to pay for it.

While the power ministry wants the coal ministry to provide for fuel for over 90,000 MW capacity the latter has claimed it can provide for only 67,000 MW capacity,without running foul of the Presidential Directive to maintain a certain level of supply.

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