CIL not in favour of pooling mechanism

Close on the heels of PMO's recent decision that CIL will decide the pooling of coal price mechanism, the PSU firm said it is not supportive of such a move at the cost of its financial interests.

Pooling formula of coal prices is determined by combining the prices of both imported and domestic coal to offset the impact of high import costs.

"It is not personally my being favourable or not (on price pooling of imported coal). But certainly not at the cost of CIL's financial interest. We will not take a hit by even a rupee on account of that. If pooling has to be done as per the government pooling, it would be outside the balance sheet of the CIL," Coal India Ltd (CIL) Chairman and Managing Director S Narsing Rao told reporters here.

Referring to the current deadlock between both the Power and Coal Ministries with regard to some of the clauses in the fuel supply pacts to which the objection were raised by some of the power firms like NTPC, he said, "Sooner than later there may possibly some kind of middle ground."

"The board will take note of the developments after it has approved earlier on April 16. So, whatever are the developments in the last close to three months will be taken note of by the board and the board will take an appropriate decision soon," Rao said. The CIL board is likely to meet this week to take a call on the issue. When asked whether CIL was comfortable with 65-80 per cent of the minimum assured supply of coal to the power firms as directed by the Prime Minister's Office, the company's chairman said, "Lets see how board takes note of that."

When asked whether it would import coal meet the commitments of the power firms under fuel supply commitments, he said, "No. Very unlikely that we will do it (import coal). We will address it to somebody who has already developed experience and expertise.

They are an equally responsible public sector company. So, there would be back to back agreement between them and our users on our behalf." When asked if volatility in prices of imported coal will make import of coal a costly exercise, Rao said, "There is no free lunch at the end of the day. If you have to import, you have to import. This market can respond differently based on the plans etc. But there is no choice."

"If you have to import to meet our current assessment this year 18 million tonnes(MT) is what our import requirement to meet 80 per cent of the new FSAs (Fuel Supply Agreements) and 90 per cent of old FSAs (current financial year)... But this year it is 18 MT. I think highest possibly next year can go up even 30-32 MT."

CIL was also looking at the possibility of investing Rs 7,500 crore in the rail infrastructure in the current plan period, he said. "We are looking at something like Rs 7,500 crore in railway infrastructure itself in this plan."

In a meeting held early this month in the PMO under the chairmanship of Prime Minister's Principal Secretary Pulok Chatterjee, it was decided that CIL could supply between 65 and 80 per cent of the requirement of power companies, for which FSAs would be signed.