Cabinet says no to price pooling of coal

The government of India on Monday buried a proposal to pool prices of imported and domestic coal to make the fuel affordable to new power plants, owing to sharp opposition to the scheme.

"Price pooling is out of the window," a source attending the Cabinet Committee on Economic Affairs on the issue said here.

While no formal reason was given for burying the proposal, the source said power projects commissioned before 2009 will continue to get coal at pre-fixed (below market) rates.

New projects commissioned after 2009 largely have a cost-plus mechanism for calculation of electricity tariff and so any higher imported cost of coal will be passed through to the consumers, he said.

Private power producers wanted the sub-market domestic coal prices to be averaged out with international price of imported coal so as to have a uniform fuel price and remove the disadvantage new projects faced as compared to older ones.

The pooling was being opposed for various reasons by older power plants and domestic coal producers.

"For the remaining 24,000 MW projects it is work in progress...remaining being which have tariff based linkages, which have no PPAs or which have tapering linkages," the source said.

The committee, which was looking into the issue, will come back to CCEA (Cabinet Committee of Economic Affairs), he added.