Subsidising Imports Should Not Be At Our Cost: Coal India


NEW DELHI – Coal India Limited on Wednesday said it has no objection to supply of subsidised imported coal to a certain set of power generators under price pooling proposal, provided it does not involve any revenue loss for the PSU coal miner.

 “As far as we are concerned, it should be revenue neutral to us. To rob Peter to pay Paul — I have no problem if you are paying some subsidy to somebody, you call it subsidy or discount, whatever you call, that money should come from others, not from me. Coal India’s position is clear,” CIL chairman S. Narsing Rao told PTI in an interview.

The Ministry of Power and the Central Electricity Authority have mooted a proposal under which CIL imports coal to fulfil its fuel supply obligations. According to them, the price of imported fuel under pooling mechanism should be based on heating value of domestic coal.

 “The burden of supplying imported coal to power stations at Gross Calorific Value (heating value) parity price of domestic coal is to be loaded on the price of the domestic coal so that there is no revenue loss for CIL,” the government said in the Lok Sabha on Tuesday.

Though import of coal was not a solution for Indian power sector and majority of the power plants in the country were designed for indigenous coal, . Rao said CIL has no objection to imports if price pooling mechanism is acceptable to all.

 “As the proposal stands, we have no problem but provided the consumers are comfortable with that… since the imported coal is more expensive, whoever gets the imported coal as part of my FSA obligation or linkage obligation, they should be given some amount of discount so that …the additional burden we will spread on everybody else,” he said.

However, the proposal being backed by the Planning Commission deputy chairman Montek Singh Ahluwalia is facing resistance from several state utilities, including that from West Bengal, which have already expressed reservations on it.

. Rao said: “As a state government, as utilities, as consumers, as a regulator, everybody should be convinced that this is acceptable.”

. Rao added that CIL supplied about 306 MT (million tonnes) to old consumers, mostly public sector units, which is for about 60,000 MW.

Under the latest FSA, the new additions include 50 per cent from private sector and the remaining from public sector.

Explaining why the pooling mechanism was opposed, he said: “…The issue is with the new people coming in and to reduce their burden, why these old guys should take the additional burden.”

It is obligatory for CIL under a presidential directive to supply 80 per cent of the committed coal to power producers under new Fuel Supply Agreements (FSAs), which was opposed by some firms.

Coal India, which produces about 435 MT of coal and accounts for about 84 per cent of the domestic production, has decided to meet the 65 per cent of the supply under FSA through domestic production and the remaining through imports.

Asked why the FSAs could not be signed despite extending several deadlines, . Rao said despite modifications, “They (the power producers) have some more reservations. But we have said this far no further. Whatever in the given circumstances, this is the best we can do.”

So far, only 30 out of 48 power producers have entered into FSA with CIL.

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