With its eyes set on reviving thermal power plants which have reached critical stages owing to poor supply of coal, the NDA Government plans to bring in the coal price pooling proposal wherein the cost of the dry fuel with domestically produced fuel and then it will be supplied to plants.
According to sources, the proposal has already been finalised and is likely to be presented before the Union Cabinet next week. Coal which is to be priced as per the aforementioned formula, will be supplied to power plants which were commissioned after 2009. The need for implementing this mechanism has arisen after the Supreme Court recently cancelled 214 coal blocks issued between 1993 and 2009, a move which hamper immediate supply to power plants.
The UPA Government had mooted the concept a couple of years back. However in February this year soon after finalising it, the Congress-led UPA had to abandon it after reluctance shown by various states which were apprehensive that the coal prices may go up due to this.
Even a Parliamentary panel on coal and steel earlier this year had opposed the move, fearing an increase in power tariffs. The parliamentary standing committee on coal and steel also earlier opposed pass over of imported coal prices to end (power) consumers as it would lead to increase in power tariffs. The proposal has once again been revived to enhance power production in the country.
Coal and Power Minister Piyush Goyal though has been keen on introducing the formula and has been pitching for it ever since the NDA Government took charge at the Centre in May this year. His keenness on coal price pooling has arisen mainly from the critical condition of thermal plants and poor demand-supply system of coal to these units, which has led to a fall in overall power generation.
The Power Ministry too, a couple of months back, had floated a cabinet note for pooling of imported and domestic coal for deciding the price of the critical dry fuel for plants commissioned after 2009.
According to official sources, the Power Ministry is of the view that pre-2009 plants should not be included in this arrangement as the share of the public sector is 98 per cent of the total capacity. The reason behind including the post-2009 power plants in the proposal stems from the fact that during this period, the capacity of public and private plants is equally divided.
As per Government estimates, if the pooling is confined to post-2009 plants the resultant increase in per unit cost of power generation is expected to be 74 paise for 2014-15, 44 paise for 2015-16 and 5 paise for 2016-17.
The coal price pooling proposal though has got postponed twice in the past one week from being presented before the Cabinet. While last week the Government had brought in the Ordinance for e-auction of cancelled coal blocks, on October 29, the matter could not come up for discussion in the Cabinet even though it was scheduled to be on the agenda.