Coal India board also agreed to pool imported and domestic coal supplies provided all existing consumers and stakeholders agree to the proposal.
Price pooling means determining a common price for similar grades of coal by taking the average price of domestic and imported coal. The common price will be applicable to all power consumers signing fuel supply agreements (FSAs).
The miner will supply 80% of the agreed coal as per the fuel supply agreements, failing which it will pay a penalty, chairman S. Narsing Rao said after a board meeting in Kolkata.
The state-owned firm will be able to supply 65% of the FSA volumes from domestic production, requiring 15% to be imported, he said.
“We have agreed to import coal but it is only applicable if the price pooling mechanism is implemented,†Rao said.
In 2011-12, Coal India will need to import 18-20 million tonnes of coal to fulfil its supply commitments, he added.
“Since the cost of imported coal is higher than domestic, every user would pay incremental charge per tonne on domestic coal to compensate for increased quantity of imported coal required to be used by coastal and non-pithead, non-coastal units,†said a Power Ministry official.
The additional cost of imported coal is to be recovered from all power plants receiving domestic coal, the official explained.
The identified power plants would get imported coal at Gross calorific value (GCV) parity price of indigenous coal, which is Rs 4,500 for every tonne of GCV of 6,300 kcal/kg.
According to estimates made by CEA, considering the transportation of 16 million tonnes coal to coastal stations over 200 km and 4 million tonne to non-pit head, non-coastal stations over distance of about 800 km, the price increase would be in the range of Rs 87-105 for each tonne.
This would result in increase of electricity generation cost by about 6-7 paise for every unit.
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