PMO asks Coal India, CEA to work on coal pricing

With impasse over the price pooling mechanism of imported coal remaining unresolved, the Prime Minister's Office (PMO) has asked both Coal India and Central Electricity Authority to work on the issue.

"The PMO has recently asked both CIL and CEA to sit and work on price-pooling," a top official in the coal ministry said.

To offset the impact of high import costs, the Planning Commission has said that CIL should adopt a pooling formula on prices by combining rates of imported and domestic coal.

While a number of private power producers have agreed to the price-pooling for coal, some of the state governments like West Bengal have said such a mechanism was not acceptable to them.

The coal ministry had earlier said the matter was under consideration and dialogue was on with the power ministry.

Earlier CIL had said that price pooling is a mechanism to implement fuel supply agreement (FSA) and "if price pooling is approved then 15 percent supply of imported coal will be not in the cost plus method, but in pooling mechanism."

The CIL board had in September approved the modified FSA without price-pooling with 65 percent domestic coal and 15 percent imported coal at cost-plus basis.

CEA is also working on a price-pooling mechanism. So far, only 30 power companies, including Lanco and Adani, have signed FSAs with CIL.