Coal India independent directors opposed to price pooling
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Coal India independent directors opposed to price pooling

Last Updated: Sunday, February 10, 2013, 13:08
 
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Coal India independent directors opposed to price pooling
New Delhi: Independent directors on the board of Coal India are strongly opposed to price pooling of domestic and imported coal as they believe the mechanism would have financial implications on the PSU.

"Independent directors of Coal India (CIL) have all along been opposing price pooling mechanism and may take it up in the company's board meeting," a source in the company said.

Sources said that independent directors who had earlier opposed enhancing the upper cap of fuel supply to power projects to 80 percent of the commitment, are of the view that if price pooling is forced upon the coal major, it would have its financial implications on the PSU.

Coal Minister Sriprakash Jaiswal last week had said the Cabinet has approved price pooling proposal and a mechanism for this would be put before the Cabinet for a final nod.

Citing reasons behind the disagreement of independent directors to the averaging of prices of imported and domestic coal, sources said as per them "importing coal is not the core area of competence of Coal India" and should be left on trading agencies like MMTC and STC.

"If the private players want to import coal, it is on the OGL (open general licence) list, there is no restriction in getting coal, so why involve Coal India which has got nothing to do with trading of coal in importing the coal," sources quoted independent directors as saying.

They are of the view that imported coal would only be beneficial for coastal power plants and not economical for other projects due to high transportation cost, they said, adding "it will be a kind of public resources to private hands."

Sources added that independent directors are of the view that "CIL has potential to produce enough coal but has evacuation problems .... It is trying to liquidate its coal stock. It can produce much more but there are not enough transportation arrangement, railway network etc."

Earlier, as per a Coal Ministry official, Coal India is apprehensive about price pooling saying it would result in an extra burden on state power utilities which already owe over Rs 5,000 crore to the PSU.

Jaiswal, however, had said that states will not be impacted by the decision to pool prices of domestic and imported coal to arrive at a uniform price of the feedstock as it would not be implemented for power plants commissioned before March 31, 2009.

The company in a statement had said, "decision on coal price pooling of domestic and imported coal if taken by the government, Coal India as a central public sector undertaking would comply with the decision while protecting the commercial and legal interests of the company".

Many state governments have voiced opposition to the price pooling mechanism fearing it could lead in power tariff.

The CIL board had earlier approved the modified FSA without price-pooling, for assured supply of 65 percent through domestic sources and 15 percent from imports at cost plus basis.

PTI



First Published: Sunday, February 10, 2013, 13:08


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