CCEA may take up coal price pooling mechanism tomorrow

The government is expected to soon announce a mechanism for price pooling of coal - blending the cost of domestic fossil fuel with the imported one to offset high price, sources said.

"Cabinet Committee on Economic Affairs (CCEA) is likely to consider a note on price pooling mechanism tomorrow," a senior government official told PTI.

The Coal Ministry last week had circulated a Cabinet note on price pooling mechanism inviting comments from various ministries - Power, Steel, Shipping, Railways and Planning Commission among others.

Earlier, the Power Ministry had 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.

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

Several state governments, including West Bengal and Odisha, have opposed the proposal of Central Electricity Authority (CEA) regarding pooling of price for both domestic and imported coal.

The Odisha government had opposed it saying that it was not relevant to the power generating companies located very close to coal mines.

Likewise, the West Bengal government has raised objections to price-pooling and conveyed to CIL that such a mechanism was not acceptable to it.

The Prime Minister's Office had asked both CIL and CEA to work on price-pooling.

CIL had stressed that price pooling is a mechanism to implement fuel supply agreement (FSA). If price pooling is approved, then 15 percent supply of imported coal "will be not in the cost plus method, but in pooling mechanism", it had said.

The CIL board had earlier approved the modified FSA without price-pooling with 65 per cent domestic coal and 15 percent imported coal at cost plus basis. So far, 54 power producers have inked fuel supply pacts with CIL.

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