Keep out estimates of new projs from coal pricing: Par Panel

A Parliamentary panel has asked coal PSUs not to include the cost estimation of new projects while working out fuel pricing to reduce burden on consumers.
It also said that government was "silent on any kind of formula/methodology" that is followed in determining the price component to ensure financial viability of new mining projects.
While observing that the cost of investment in new projects was one of the factors taken into account for coal price fixation by PSUs, the panel recommended that "such cost estimation for new projects be kept out for fixation of coal price to secure the interest of common consumers".

The Coal Ministry has informed the panel that as per the guidelines, it is necessary for Coal India to set prices at a level where financial viability of new coal projects is ensured, said the Standing Committee on Coal and Steel in a report tabled in the Parliament.
"It has further been stated that the modernisation of existing mines for augmentation of production to achieve planned production involves additional investment for which surplus generation from profit is utilised," it said.
It added that the Committee, however, find the reply silent on any kind of formula/methodology which is followed in determining the price component which is used for ensuring financial viability of new coal projects.

Finding the justification put forth by the ministry "far from convincing", the Committee said the Coal Ministry should review the present methodology of coal pricing of addition of cost estimated of future investment in coal projects to coal prices, unnecessarily increasing the burden to coal consumers.
The committee would like to be apprised of the action taken in the matter, it added.