The Government has decided to keep the much-talked about ‘coal price pooling’ mechanism in abeyance.
Instead, it has decided to bring in different mechanisms to procure imported coal for different kind of power projects.
These were decided in a meeting of the Cabinet Committee in Economic Affairs under the Chairmanship of the Prime Minister Manmohan Singh on Monday. “The coal pool pricing issue is out of window,” a highly placed source told reporters after the meeting.
It is believed that the Power and Coal ministries placed options for both cost-plus and pooling mechanism to procure imported coal before the Cabinet panel, however, the panel favoured the cost-plus system.
Three groups
According to the source, various power projects have been clubbed into three groups.
The first group consists of projects that were commissioned before 2009. These have a total generation capacity of 65,185 MW and are being supplied fuel by Coal India as per fuel supply agreement (FSA). These projects will continue to get domestic coal at the same price.
The second group makes up for projects that came up after March 2009 and account for nearly 36,000 MW capacity. For these, Coal India, in its FSA, has said that it would meet 65 per cent of annual contracted quantity by domestic supplies and remaining 15 per cent would be imported.
These power projects will get imported coal at cost plus (means landed price of imported coal plus transportation charges and local levies). The higher cost of fuel would be charged from the buyers.
However, the power plant itself is free to import coal, instead of taking it from Coal India. In such a case, Coal India would consider the 15 per cent as deemed-supplies.
There will be a third category of projects with total capacity of around 24,000 MW. These projects include those awaiting coal linkages or have captive coal blocks but are yet to start production. Nothing has been decided about them.
“Work is in progress for them. The panel working on them would come back to CCEA in three weeks,” the source added.
On February 5, the CCEA had given an ‘in-principle’ nod for the pooling mechanism. It had directed the Coal and Power Ministries to decide the methodology for price pooling within five weeks.
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