Reports suggest that the union coal ministry may restrict the proposed coal price pooling mechanism only to power projects getting commissioned after March 2009.
In a note forwarded to the Cabinet Committee on Economic Affairs (CCEA), the coal ministry has proposed the limited application policy for price pooling. The CCEA had earlier asked the coal and power ministries to finalise a workable formula on pooling before it can decide on the issue.
But industry sources feel that pooling cannot be implemented in isolation and its purpose would be defeated if selective implementation results in sharp increase in the fuel price for projects coming after March 2009.
The average coal price may rise just Rs 100 per tonne or about average 25-30 paise hike in electricity tariff if the government implements price pooling on all projects coming before and after March 2009. But the price rise would be much higher if limited pooling is allowed, industry officials opine.
Under the proposed price pooling mechanism, CIL aims to recover the additional cost of imported coal by raising domestic coal prices and supplying full quantity of coal at uniform price to consumers.
The pooling mechanism has already been opposed by a majority of state distribution utilities as they fear that it would result in a sharp escalation in a projectÂ’s variable cost and, thereby, result in higher power tariffs.
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