State opposes price pooling of coal

The State Government has strongly opposed the Centre’s proposal to introduce pooling price of coal by blending domestic fossil fuel with imported coal, saying it will be like incentivising Coal India Limited (CIL) for its inefficiency to meet the coal demand of the thermal sector.

“This particular proposition of blending price of the imported coal with that of domestic coal possibly does not make any sense to the generating companies located very close to the coal mines,” said  Energy Secretary PK Jena in a letter to Chairman of the Central Electricity Authority (CEA).

He said Odisha is a coal bearing state and coal of ‘F’ and ‘G’ grade, which is solely utilised for thermal power generation, is abundantly available.

Jena said the proposal to transport indigenous coal from the pitheads of coal bearing states to non-coal bearing states and transporting imported coal to different pithead plants did not appear to be economically prudent and will put avoidable cost of double transportation on the consumers.

Claiming that the switch-over to pooled price would benefit private power producers at the cost of the state and general public, the letter said the basic objective of importing coal was to meet the Fuel Supply Agreement (FSA) commitments by Coal India Limited.

“If pooling of price is followed, it will ensure subsidy to those power plants which do not have coal linkage at the cost of those power plants which are already having coal linkage,” Jena said.

Jena said the reported cost of Rs 4,500 per tonne under proposed pooling price concept would result in likely price increase of coal by Rs 100 per tonne and consequential increase of electricity tariff by 7 to 8 paise per unit. “The logic behind such a proposal of introduction of pooling price in case of coal and putting the consequential power tariff burden on the consumers of coal bearing states as well as the non-coal bearing states was not in the national interest,” he said.

If the Centre goes ahead with such a policy of providing fuel price security (FPS), it may consider to bear additional cost of FPS and exempt the ‘poverty-ridden coal bearing States like Odisha from subsidising such avoidable prohibitive costs,” he argued.

“We are of the view that the blending price of imported coal with that of the domestic coal is not at all a good economic jurisdiction and therefore, should not be considered,” Jena said.