Coal price pooling likely only for power plants after March 2009

Under the revised terms of the fuel supply agreement (FSA) finalised by Coal India, it will supply 80% of the annual contracted quantity of coal to power producers. Out of this, 65% of the coal will be provided from domestic sources and the balance 15% coal would be met through imports. CCEA expects that pooling of coal prices would be required in 2013-14 and 2014-15 in view of CIL’s inability to meet even 80% of the annual contracted quantity of coal for new generating units commissioned from April 1, 2009, to March 31, 2015.

“Coal India expects shortage in meeting the needs of new linked customers from its domestic mines for the next two years. If the PSU's production picks up after that, there would not be any big need to import coal and meet the needs of customers. Coal price pooling, therefore, should not be implemented as a permanent measure,” said a coal ministry official, confirming that the ministry is in favour of limited application of the pooling mechanism.

A CIL official, however, said 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. “Complete implementation of pooling (for projects coming before and after March 2009) would have resulted in an average coal price rise of just R100 per tonne or about average 25-30 paise hike in electricity tariff. But this will

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