Keeping in view the fuel needs of the power sector, the government today said there was no other choice but to import coal and adopt a policy of blending the prices of domestic and imported coal.

"If the coal requirements of the existing power plants and the power plants that will come into operation by March 31, 2015 are taken into account, there is no alternative except to import coal and adopt a policy of blending and pooled pricing," Finance Minister P Chidambaram said while presenting the Union Budget 2013-14.

His statement comes at a time when state governments, including West Bengal, and independent directors on the board of Coal India Ltd (CIL) have expressed reservations to the mechanism. Some state governments fear it could lead to hike in power tariff.

Chidambaram said that despite the country having abundant reserves of fossil fuel, "we continue to import large volumes of coal".

Coal imports, which shot up to 100 million tonne (MT) from April to December last year, will further scale to 185 MT by FY'17, he said.

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

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