Voicing concern over under-pricing of domestic coal, the Central Electricity Authority (CEA) has said that disparity in local and import prices was discouraging power utilities from importing it.
In a recent note to the power ministry, the CEA projected short supply of coal to the tune of 91 million tonne (MT) this fiscal and expressed concern over the reluctance of the utilities to import coal as its landed cost was currently hovering around $4-4.2 per MMBTU (Million Metric British Thermal Units), while the price of domestic coal was around $1.76.
“Under-pricing of domestic coal discourages use of imported coal by power utilities and generates higher demands for domestic coal. If there is a price pooling, power plants using imported coal will not be discriminated against due to merit order dispatch policy,” the Authority said.
Calling for some parity between the domestic and import rates, the authority has asked the government to devise a “price pooling mechanism” to offset possible under-recoveries by coal companies. As a suggestion it has urged for creation of a centrally financed mechanism to ensure balance of payments to coal firms.
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