Gujarat not to buy power based on pooled coal price

Union Power Minister M Veerappa Moily
DP CORRESPONDENT

New Delhi

As many as four states including West Bengal and Gujarat may not buy costly power from the generation companies based on pooled prices of domestic and imported coal. The state-owned Coal India Limited (CIL) has said it would sign pacts with power companies by assuring them a minimum supply of 80 per cent fuel of the total contract. It would supply 65 per cent of the contracted quantity through domestic production and would meet the 15 per cent shortfall through imports.

The prices of the domestic as well as international coal would be clubbed and an average price would be charged from the power utilities. They, in turn, would charge a higher price for supplying electricity to the distribution companies after including the rise in cost of fuel. “If all the state electricity boards (SEBs) agree to pay higher price for electricity due to increase in fuel cost then there is no problem. But West Bengal, Chhattisgarh, Haryana and Gujarat are not agreeing,” a Power Ministry official said. The SEBs in these states have expressed reservations in paying higher price for the electricity, he said without divulging further details. “We are in talks with these four states, we are hopeful of a solution soon,” he added.

Earlier this month, Coal India board reached a consensus on supplying a minimum of 80 per cent of the contracted quantity of the fuel to power firms, meeting 15 per cent through imports. Coal India is expected to import around 20 million tonne coal this year. This decision followed a direction from the Prime Minister’s Office (PMO) to the company to sign the pacts with power firms for supply of 65-80 per cent of the contracted quantity, amid delays in signing of the agreements. The Planning Commission and Power Ministry had suggested pooling of the prices of imported and domestic coal to neutralise the impact of higher prices of imported coal. Coal India also agreed to a hefty penalty of up to 40 per cent if it fails to supply the committed quantity of the fuel to power firms. If Coal India supplies below 50 per cent of the contracted quantity, the fine would be 40 per cent of the value of fuel not supplied.

If the supply is between 65 and 80 per cent, then the penalty is 1.5 per cent of the value of fuel not supplied. For supply between 60-65 per cent of the contract, the penalty would 5 per cent, while the penalty is 10-20 per cent for providing coal between 50-60 per cent of assured quantity. There will be no penalty if Coal India supplies approximately 80 per cent or above the committed quantity of the fuel. Adequate actions would be taken as per the conditions.