Various price pooling options under consideration: BK Chaturvedi

NEW DELHI: Various options are being worked out for averaging the prices of domestic and imported coal to get a uniform feedstock rate in the country so as to help meet the increasing demand from the power sector, a Plan panel Member said today.

Against the backdrop of acute fuel scarcity hurting the power sector, the government has given in-principle approval for coal price pooling mechanism.

"Coal price pooling is a good idea. Various options are being worked out," Planning Commission Member (Member) B K Chaturvedi said on the sidelines of India Energy Congress.

Price pooling refers to discovering price after blending the cost of domestic and imported coal.

In order to meet the demand for the power sector feedstock, India needs to import coal, which has different rate structure than the domestic coal.

Significant power generation capacities are running below their full potential due to non-availability of coal.

However, there are concerns about price pooling pushing power tariffs higher since overseas coal is expensive. Some states are believed to have reservations about the mechanism.

"The question is not about states. The question is about what should be the pricing for larger availability of power for the country," Chaturvedi said.

Going by some estimates, price pooling could increase electricity tariffs by at least 13 paise per unit.

Prime Minister's Office had directed Coal India Ltd (CIL) and Central Electricity Authority (CEA) last year to work on price-pooling, so as to ensure 80 per cent supplies to power plants.

However, the final decision on the issue was pending for long due to differences between the Coal and Power Ministries on how the impact of higher imported coal prices will be shared between CIL and power companies.

CIL, on its part, had said that price pooling is a mechanism to implement fuel supply agreement ( FSA) that it has to sign with power companies for the assured supply of coal.