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Some critical questions on the pooling of the price of imported coal with domestic production seem to have been raised at the five-hour marathon board meet of Coal India on Tuesday.
The meeting discussed the possibilities of amending the draft fuel supply agreement (FSA) approved in April.
According to sources, a section of the directors felt that the pooling proposal, if implemented, could raise domestic coal prices by approximately Rs 100 a tonne. This would mean power consumers across the country would have to pay 10 paise or more on every unit of electricity.
This would benefit companies that signed the new FSAs, constituting nearly one third of India’s total thermal power capacity of 1.2 lakh MW.
Govt insistence
The agenda was raised on Tuesday as the Union Government felt it would be unfair of CIL to supply costly imported coal to power plants commissioned since April 2009, as part of the FSA.
On the other hand, imports are unavoidable to meet the 80 per cent supply commitment as CIL is no position to supply more than 65 per cent of domestic coal, in this fiscal.
In its decision in April, the CIL board passed the entire burden of such imports on the power sector.
Independent Directors
The sources said that during Tuesday’s board meet, a section of independent directors was strongly critical of the proposal to force power consumers across the country to subsidise the cost of fuel to a section of producers.
Faced with objections, the board decided to discuss the issue again at its next meeting, likely to be held on August 7.
Public sector companies were also criticised for resisting the signing of the draft FSAs, as approved by the CIL board in April.
Contrary to the private sector, which had signed the FSAs on CIL’s terms, PSUs led by NTPC demanded a hike in penalty provisions for non-supply and repeal of the internationally accepted gross calorific value (GCV) based pricing introduced in January.
While a decision on enhancing penalty stands postponed till the next meeting, according to the sources, some independent directors questioned the rationale of the PSUs’ stance. The directors were particularly critical of their opposition to pay on GCV terms and were not ready to reconsider the decision on pricing norms.
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