Central Electricity Authority for Coal India as price pooling nodal body - But, the proposal has few takers

The Central Electricity Authority (CEA) has suggested that Coal India Ltd (CIL) be made the nodal agency for pooling of coal prices besides being made the canalising agency for import of coal. The proposal, though has found few takers in the coal ministry.Coal is currently freely imported into the country by power projects mainly through an intermediary trading company which also arranges for transportation.

“It will be simpler (for introduction of pool pricing mechanism) if all imports to meet the shortfall in the availability of domestic coal be made by domestic public sector company like CIL,” CEA said in its recommendations on the pooling mechanism for domestic and imported coal.

A senior CIL executive told Business Standard that the company does not want to import coal for other companies, a condition which has also been imposed by the New Coal Distribution Policy.

“According to the policy, CIL and Singareni are required to meet the country’s coal demand even through imports. We did not want this but it was thrust on us. It is a policy in which one company is asked to meet the country’s entire coal demand even if it has to be met through imports,” he said.

Questioning the feasibility of pooling coal prices, coal minister Sriprakash Jaiswal told Business Standard that pooling was feasible only if one company imports coal.

“Pooling is a proposal but no decision has been taken so far on this. Import of coal is under open general licence (OGL). As of now, there is no use talking about pooling because CIL is not the only one importing,” he said. The Union minister said private companies could go ahead and import coal at any cost.t has also proposed a pooled price formula based on the average price of imported coal, after transportation and insurance charges, and the coal produced by CIL and Singareni Collieries Company Ltd (SCCL). While drawing up the formula, the technical regulator for the power sector also said captive coal should be kept out of the mechanism for arriving at the pooled price.

Around 87 coal blocks have been allocated to independent power producers and states for captive coal mining in power sector. It is difficult to price this coal since there was no bidding for distribution of the mining rights. Besides, as CEA pointed out, the pooling of captive coal will create problems for these projects since they have power purchase agreements signed with utilities through bidding on tariffs arrived on the basis of captive coal blocks.

NTPC Ltd, the biggest coal consumer in the country with an annual requirement of more than 150 million tonnes, is also not keen on the pooling proposal. The average cost of NTPC coal will go up since around 85-90 per cent of its consumption is met through domestic coal. “We are already pooling coal at our power plants so at the company level our cost is pooled,” said a senior NTPC executive.