Power producers seek imported coal at subsidised price

OUR BUREAU, THE HINDU BUSINESS LINE
KOLKATA, OCT. 11:
Ashok Khurana, Director-General, Association of Power Producers, on Thursday said that Coal India Ltd (CIL) should supply imported coal at a subsidised (pooled) price to ensure lifeline to power producers, especially those in the private sector.

According to him, the National Coal Distribution Policy, 2007, allows the coal major to supply imported coal and “adjust the over all price”. A former bureaucrat at the Union Power Ministry, Khurana was critical of the “activism” on the part of CIL board in objecting a proposal to pool the price of imported coal with domestic produce.

The board of directors of CIL raised “objections” to the proposal on grounds of possible financial risk of the company if existing power sector consumers deny subsidising the newly commissioned generation capacities. Khurana, however, felt that import is the only option to bridge the supply gap.

And, to make the proposition economically viable imported coal should be subsidised by taking advantage of the arbitrage opportunity between domestic and imported coal.

“In the short-to-medium run we need to bridge the gap by imports and make necessary adjustments in pricing,” he pointed out.

India is likely to face a shortfall of about 200 million tonne of coal by the end of the current Plan period (2012-17).

This shortfall would have to be met through imports, he said.

OPPOSITION VOICES

Khurana’s observations in price-pooling were countered by Malay De, Principal Secretary, West Bengal Power Department.

According to De the proposal for cross-subsidising a segment of coal consumers, goes against the principles of market economy that opened doors to private producers to invest in the power generation sector.

He was also criticised the private power producers for seeking relaxation in the 25-year fixed tariff regime.