Ministry for coal price pooling to mitigate any SC deallocation

In a move to deal with the situation following the Supreme Court verdict holding allocation of coal blocks since 1993 as illegal, the Power Ministry in a cabinet note has proposed pooling of imported and domestic coal for deciding the price of fuel for plants commissioned after 2009.

The proposal is aimed at meeting the increasing demand for coal in a situation where imports have become essential to tide over shortages, an official source told IANS Friday.

The power ministry has proposed that imported coal be supplied to power plants after pooling its price with domestic coal in case the apex court decides to cancel captive coal blocks at its hearing on Sep 9, the source said.

The government has told the Supreme Court it was ready to auction the coal blocks if they are cancelled.

The move follows the ministry's view that pre-2009 plants should be kept out of this arrangement as the share of the public sector is 98 percent of the total capacity.

The official pointed out that the capacity created after 2009 is almost equally shared between both public and private sectors and, therefore, the price pooling mechanism would work out favourably for plants commissioned after that year.

While state-miner Coal India will work out the commercial arrangement for the import and supply of coal under the price pooling, this arrangement for power projects commissioned after 2009 is expected to raise power tariffs by 74 paise in 2014-15, 44 paise in 2015-16 and five paise in 2016-17, the source added.

The ministry has said that for pre-2009 plants, the coal supply must be kept at the existing level of 90 percent of the annual contracted quantity. Moreover, the arrangement will not be applicable to imported coal-based projects.

Power producers have been advised to import 54 million tonnes (MT) of coal in the current fiscal to tide over domestic supply shortages.

"In view of shortage of domestic coal as of now, it would not be feasible to meet 100 percent requirement of power producer (including NTPC), from domestic coal production alone," Coal and Power Minister Piyush Goyal recently told parliament in a written reply.

Coal imports in the last fiscal were 168.44 MT, while in 2012-13 India imported 145.785 MT of dry fuel.

The total estimated quantum of coal resources in the country is 301.56 billion tonnes, while the coal extracted during 2013-14 was 565.64 MT.