Centre reviewing pooled pricing of imported coal

PRATIM RANJAN BOSE, THE HINDU BUSINESS LINE

CIL board may meet next week to discuss amendments to FSAs

KOLKATA, JUNE 25:
The Centre is taking a re-look at the Plan panel proposal asking Coal India to supply imported coal at pooled price.

Decision is awaited if CIL should be entrusted with the primary responsibility of imports or should individual producers be left to fend for three years till such time the domestic coal production is stepped up to the desired levels.

The Coal Ministry has been asked to further review the issue in consultation with the Central Electricity Authority (CEA).

According to sources at the meeting at Prime Minister’s Office (PMO) on June 22, CIL representatives cited operational hurdles in supplying imported coal at cheaper than market price through the pooled price mechanism.

The company is reportedly anticipating two sets of problems: First, political as customers of domestic coal will have to shell out a higher price to partially subsidise the cost of imported coal. The objection is primarily expected to come from state utilities enjoying 90 per cent assured supply as per the old fuel-supply pacts.

Second, CIL has little expertise carrying out imports and it has to do the same through agencies such as MMTC and STC. Moreover, the pooled price may create an artificial demand for CIL imports.

DECISION ON FSA

Meanwhile, the CIL board is likely to meet next week to discuss amendments to the fuel-supply pacts, as suggested in the June 22 meeting. Sources are hopeful that now that the Government is agreeable to relaxing the trigger level (minimum assured supply — from 80 per cent to 65 per cent) for three years, the CIL board may take a positive view.

“The CIL board was concerned as the company was clearly in a production shortfall to meet the FSA targets at 80 per cent trigger. The problem appears to have been eliminated once the trigger level is relaxed,” a source said.

Meanwhile, the company has reportedly returned 13 of the 16 recycled blocks it was allocated.