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Coal pricing formula caused Rs 8,400 cr under-recovery

The cost of coal comprises several elements before it lands at the power unit

Shreya Jai  |  New Delhi 

Coal pricing formula caused Rs 8,400 cr under-recovery

The power producers are now asking for a separate index for deciding the price of and its transportation, because, they are claiming, they pay more than what the indices work out. The cost of comprises several elements before it lands at the power unit. These include taxes imposed by states, the cess imposed by the Centre and states, the terminal surcharge, the busy season surcharge, and the development surcharge during various seasons. The clean energy cess is imposed to recover the cost of in renewable and projects. The and on are done by the in accordance with rake availability and seasonal for and wagons for it. “The faulty and price escalation index, where presently 49 per cent of costs and 21 per cent of fuel costs are not covered, has been leading to under-recovery to the tune of Rs 8,400 crore for 12,000 Mw of installed generation capacity,” said the letter by the (APP) dated September 28. India and the ministry of did not respond to the query. Cases on allowing such costs as pass through are pending in several courts and regulatory bodies.

The power developers have asked for passing through of these charges under “change in law”. The National Tariff Policy, 2016, has laid down that any change in cost after a project has been awarded would come under the category of “change in law” and would be allowed to be passed through in the final cost of power. However, any change in power tariffs requires approval from either the state or the Central Electricity Regulatory Commission (CERC). Power procurers challenge such moves because they escalate power rates. The in an order of October last year had observed that the index for deciding the cost of and its needed revision. “The commission also direct the staff of the commission to carry out an exercise for revision of methodology for computation of escalation indices for the non-coking used in power generation which will take into consideration the various elements which result in escalation of price of coal, the existing mechanism to compensate such escalation, the difference between the actual escalation in respect of the grades of used by the power generators and the actual indices allowed by the commission, and whether the power generators should be given relief with effect from 2014 and if so, in what manner. The staff will submit a report on the above within a period of two months to the commission,” said the order. There has been, however, no report as yet since the order in October last year. AT THE COALFACE

  • Power producers question the criteria of deciding prices
  • Currently, WPI is base index for pricing of all grades of coal
  • Central Electricity Regulatory Commission in process to draft a separate index for coal

First Published: Fri, October 27 2017. 01:07 IST
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