CIL board meet to discuss price pooling, fuel supply pact issues

KOLKATA: State-run Coal India ( CIL) has included sensitive issues of price pooling for coal imports and trigger point of fuel supply agreements on the agenda of its board meeting scheduled for Tuesday.

"Having received an intimation from the coal ministry, we have incorporated price pooling of coal as well as making changes in the trigger point in the fuel supply agreements on the agenda of Tuesday's board meeting," CIL chairman S Narsing Rao said. "We will be discussing both these issues and lets hope we can arrive at a consensus."

Price pooling means common pricing of similar grade coal, which is arrived at by taking the average price of imported and domestic coal. A trigger point is the level of the contracted fuel that the supplier (CIL in this case) promises to deliver to the power units.

It's widely expected that the board will arrive at a price pooling mechanism where the rise in generation cost, because of costlier imports, will be passed on to consumers. The board is also expected to lower the trigger point from 80% to 65%, which would mean that Coal India will pay a penalty if it fails to supply more than 65% of the contracted fuel.

"According to the proposed price polling model, Coal India will import coal and then supply it to power generators," a Coal India executive said on condition of anonymity. "Power plants in coastal areas will be supplied 30% of their total requirement in imported coal, while those within 300 km of the coastline will be supplied 15%. Rest of the generators will use 100% domestic coal. The resultant increase in price of coal will be distributed equally among all consumers irrespective of the coal supplied."

If the board approves this model at Tuesday's meeting, CIL will undertake the issue of importing coal on behalf of almost all power producing companies. The mooted fuel supply agreement proposes the trigger level at 65% and penalty at 10%. This assumes significance because the power ministry had opposed the earlier version of the fuel supply agreement, which fixed the trigger point at 80%.