'Coal price pooling to benefit plants of 70,000-Mw capacity'

To be commissioned by 2014-15, around 28,000 MW are under construction

Price pooling for coal will lead to better capacity utilization of power plants and the benefit would accrue to total of 70,000 MW to be commissioned by 2014-15 of which around 28,000 MW are under construction.  By rationalizing the movement of imported coal and domestic coal, it would save transportation cost.  Association of Power Producers (APP) projects a saving of Rs 1,200 crore due to reduction in the generation cost and removal of transportation constraints.

"Further, as we understand, the model innovatively proposes a cascading nature of blending imported coal with domestic coal, to minimize coal transportation logistics. It has been proposed that coastal plants would have higher proportion of imported coal, while plants closer to mines would have a lower proportion. However, all plants would pay the same price for coal,” said Ashok Khurana, director general, APP.

Pricing impact
According to APP, the proposed pooling scheme envisages price differential to be distributed over the entire domestic coal production. Khurana argued that it is very essential to distribute the price impact on the entire coal base so as to soften the incremental price impact. In case it is not done the entire effort may not yield the desired results as many projects may find it difficult to get dispatched because of higher cost of power.

“It is very difficult to ascertain the actual price impact because it will depend on the time of import, quantum of import and the international price indices at that point in time. However, looking at the present condition and the present quantum of estimated the price increase is likely to be around 12 paisa per unit, which is not a very high price to pay for additional generation of 35 to 47 billion units per year,” Khurana informed.

Khurana said if  the cost of power is assumed at Rs 4 and the coping cost in case the power is not produced at Rs 12 per unit, the gain to the economy is Rs 28,000 crore in 2013-14 and Rs 37,600 crore in 2014-15.