Chief Minister Naveen Patnaik on Wednesday wrote a letter to Prime Minister Manmohan Singh opposing the Centre’s proposal for pooling of prices of imported coal with domestic coal.
The move is not economically prudent, he said, stating that such pooling of price would increase transportation costs and power tariff which is not in national interest.
Patnaik in his letter said, “The State Government is of the considered view that transporting indigenous coal from the pithead coal-bearing States to non-coal bearing States and transporting imported coal to the pithead plants, as envisaged in the pooling of prices of imported coal with domestic coal by the Ministry of Coal, does not appear to be economically prudent. Introduction of the concept of pooling price will unnecessarily increase transportation costs and, consequently, power tariff which is certainly not in the national interest.”
Patnaik said, “While the objective of importing coal is to meet the FSA commitments by coal supply companies and while FSA stipulates the power utilities to pay as per the grade variance of coal, the extra cost on account of importing high grade coal should be borne by the coal suppliers since they will get the benefit of extra revenue due to improvement in grade.”
Patnaik pointed out that the Odisha High Court in a judgement on March 30, 2012 reiterated that the CIl and its subsidiaries are not optimising their coal extraction from mines and forcing the thermal power companies to depend upon imported coal, which has a cascading effect on the power tariff affecting general consumers of electricity. “Therefore, coal import is not at all necessary to run thermal power stations in Odisha which is sitting over abundant coal reserves.”
Patnaik said, “As the fuel cost is a pass-through item, due diligence and cost control by the power generators is of paramount importance. The burden of high cost coal over and above the administered price should not be passed on to the consumers.”
In this context, the Chief Minister said, “My State is of the view that all pithead power stations having long-term PPAs with the distribution companies should not procure any coal through e-auction or imported coal for generation up to 85% PlF level. Thus, the idea of pooling prices of imported and domestic coal should be dropped.”
He strongly pleaded with the Prime Minister that pooling of prices of imported coal with domestic coal is not in the greater interests of coal-rich States like Odisha as it is not based on any economic justification and, thus, should not be permitted.