Power cos may get nod to pass cost borne to meet coal shortage

The government may allow power companies to meet any shortfall of coal through their choice and pass the increased cost to end consumers, if Coal India fails to supply the committed quantity.

According to sources, Power and Coal Ministries have agreed to an arrangement where the generation companies, which have bagged projects through international competitive bidding, will be allowed to import coal and pass on the cost to the consumer in the form of increased tariff.

This move is aimed at breaking the deadlock over signing of Fuel Supply Agreements between power companies and Coal India Ltd (CIL).

“The companies will be supplied coal from Coal India and if there is a shortfall in that supply, they (firms) can import that much amount either through Coal India or any other means,” sources said.

The proposal is likely to be approved in the next meeting of the Cabinet Committee on Economic Affairs (CCEA).

In April, CCEA buried a proposal to pool prices of imported and domestic coal owing to sharp opposition to the scheme.

It said that the power projects commissioned before 2009 will continue to get coal at pre-fixed (below market) rates.

New projects commissioned after 2009 largely have a cost-plus mechanism for calculation of electricity tariff and so any higher imported cost of coal will be passed through to the consumers.

The government is mulling import of the fuel as Coal India will fulfill 65 per cent of the demand from domestic sources and another 15 per cent can be imported.


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