The Planning Commission is examining the feasibility of administering a pooled price for both thermal and coking coal as country’s energy consumption increasing fast on back of strong economic activity. The move is aimed at levelling the field between industrial users of imported and domestic coal, a source in the Commission said.
The price of imported coal is much higher compared to the coal supplied by Cola India Ltd (CIL) under long-term linkage to bulk consumers. Projects based on imported coal are at a disadvantage vis-a-vis those using domestic coal. ?India’s coal imports are rising fast. The idea is to see if a central agency can be tasked with importing coal and managing pooled price mechanism. There are many practical difficulties in implementing the coal price pooling . The Panel has just started the exercise to seek stakeholders’ inputs over the issue,? the source said. Currently, the price of thermal coal supplied by Cola India Ltd to bulk users like power, cement and sponge iron is much lower than that prevailing in the international market. Because of this price differential, utilities are reluctant to import coal despite shortfall in domestic availability of the fuel.
Besides, there is a lot of criss-crossing of coal that leads to an undue transportation cost for power project developers. The current coal linkage allocation does a suboptimal allocation of demand from coal supply points. While about 12.5 million tonne per annum domestic coal is shipped towards coastal Tamil Nadu from Orissa, almost 14 mmtpa coal is expected to be supplied to NTPC’s power plants in hinterland, as per data compiled by Indian Chamber of Commerce.