The Central Electricity Authority (CEA) has said that Coal India’s independent directors’ observation that the miner would incur losses of Rs 3,000 crore by implementing the proposal for pool pricing is “not correct”.
“CEA has given the explanation to the nodal Power Ministry. The proposal mooted is ‘revenue neutral’ for Coal India,” a senior CEA official told Business Line .
The CEA, which furnished details to the Power Ministry last week, said that it is “not favouring the power companies” and if fuel supplies at 80 per cent of plants’ demand have to be met, some of that gap has to be met by imported coal.
Coal Secretary S.K. Srivastava had forwarded the Coal India independent directors’ concern to his counterpart in the Power Ministry P. Uma Shankar seeking his response.
On Wednesday, the pool pricing issue was being discussed by Pulok Chatterjee, Principal Secretary to Prime Minister, S.K. Srivastava, Coal Secretary, and S. Narsing Rao, Coal India Chairman and Managing Director, and officials from the Power Ministry.
The independent directors had told the board of Coal India that the company should not agree to CEA’s proposal, which would result in supplying subsidised imported coal to power companies, which is not legal.
The independent directors also alleged that CEA is favouring power companies and their price pooling proposal will benefit them by offering cheaper imported coal.
Coal India is awaiting responses from customers before arriving at any decision on pooling mechanism.
The issue is crucial when Coal India signs nearly 130 fuel supply agreements (FSAs) with power companies by next month.
Fuel supplies for nearly 60,000 MW hang in balance. These were units installed from January 2010 till March 2015. These power plants are yet to seal a fuel supply agreement.
According to estimates, 60,000 MW would require additional about 300 million tonnes of coal. Coal India plans to supply up to 65 per cent of demand locally (195 million tonnes), and the balance needs to be imported.