Proposals to bring changes in coal price pooling mechanism

Proposals to bring changes in coal price pooling mechanism

With the impasse over the price pooling of imported coal remaining unresolved, there is a proposal to bring some changes in the mechanism, amid the PMO asking Coal India and Central Electricity Authority to work on the issue jointly.

"It is being proposed to bring slight changes in the price pooling model. There is a proposal that pricing (of imported coal) should be on the calorific value (of coal) among others," a source close to the development told PTI.

Since the proposal is at a very nascent stage, not much can be said now about the changes in the mechanism, the source said.

To offset the impact of high import costs, the Planning Commission had said that Coal India (CIL) should adopt a pooling formula on prices by combining rates of imported and domestic coal.

The Prime Minister's Office (PMO) had last month asked both CIL and Central Electricity Authority (CEA) to jointly work on price pooling.

Some of the states, including West Bengal, have raised objections to the mechanism.

Earlier CIL had said price pooling was a mechanism to implement FSA and "if price pooling is approved then 15 per cent supply of imported coal will be not in the cost plus method, but in pooling mechanism".

Planning Commission Deputy Chairman Montek Singh Ahluwalia had recently said the price-pooling mechanism should be adopted for fuel supply to power firms but solution to some of the issues involved could take some time.

The CIL board had earlier approved the modified fuel supply agreement (FSA) without price-pooling with 65 per cent domestic coal and 15 per cent imported coal at cost plus basis.

So far, only 30 power companies, including Lanco and Adani have signed FSAs with CIL.