Find a better way to pass imported fuel cost: PowerMin to CERC

Also suggests working out a mechanism which can do away with pooling of coal prices

The Power Ministry has asked sectoral regulator CERC to prepare the best possible formula for passing on the cost of imported fuel to the electricity generating firms.

It also suggested that if they could work out a mechanism which can do away with pooling of coal prices.

In a recently convened meeting, Power Secretary P Uma Shankar has asked the Central Electricity Regulatory Commission (CERC) to pass on the cost of imported coal (that would be blended with domestic coal) to the generators with or without pooling of coal prices, a source close to the development said.

The development comes on the heels of the government giving "in-principle" approval to averaging prices of domestic and imported coal and come out with a uniform fuel price for power generation in the country.

The Cabinet, last month, asked the coal and power ministries to come back with specifics of the proposal.

Ministry of Coal on the other hand is also working on coal formula for plants with no linkage.

The government has also proposed that the plants which were commissioned up to March 31, 2009, domestic coal will continue to be supplied at Coal India notified prices.

With respect to the plants (with aggregate capacity of about 66,000 MW) commissioned, or to be commissioned during the period from April 1, 2009 to March 31, 2015, Coal India will provide imported coal.

The state-run monopoly may also be directed to provide coal, on cost-plus basis to all the willing producers to take such coal in addition to domestic coal, to other plants (with aggregate capacity of 7,000 MW) that are likely to be commissioned by March 31, 2015.

According to sources, "Producers who have already signed Fuel Supply Agreements (FSAs) with the provision of imported coal to be supplied by Coal India on cost plus basis will also be given an opportunity to exercise their option afresh for imported coal on cost plus basis."

The plants, which are reluctant to take imported coal on cost plus basis, will be supplied imported coal at a pooled price.

The pooled price will be worked out by Coal India as per the methodology and modalities mentioned by Ministry of Coal.

The dual pricing mechanism can also be considered where the higher cost of coal is pooled and shared amongst all the post March 31, 2009 plants.

This is likely to be finalised by the power sector planning body Central Electricity Authority (CEA) in consultation with Coal India, Railways and Port authorities will decide on the allotment of the coal.

In the case of plants (with aggregate capacity of about 16,000 MW) which would be commissioned by March 31, 2015 but which have not been given linkage, may be examined by an inter-ministerial committee headed by the Coal Secretary, the sources said adding that the higher cost of imported coal will be allowed as a pass through.