PlanCom writes to PMO on dual pricing of coal

Tags: Coal, PlanCom, PMO, News
The Planning Commission has written a note to the Prime Minister's Office (PMO) asking

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it to examine dual pricing of coal to power producers, amid shortfall in supply of fuel to power stations.

The Prime Minister's Office has received a note "from the Planning Commission regarding dual pricing for supply of coal to power stations for examination and further necessary action," PMO said in a letter.

Under dual pricing, a pre-determined quantity of domestic coal would be supplied to every power producer at notified price.

The balance would have to be procured at international prices in case of imports or at the import parity price (import price of coal plus duties and transportation) in case of domestic coal, the Planning Commission said in a discussion paper.

Pitching for dual pricing, Planning Commission had said in the current fiscal, Coal India (CIL) expects to supply only about 379 million tonnes (MT) of domestic coal at administered prices, leaving a balance of about 100 MT to be imported at market prices.

The present arrangement compels off-coast power producers to import coal, causing wasteful transportation which adds to congestion as well as costs, it said.

An arrangement that rationalises coal prices in order to avoid dual transportation would lead to significant savings in time and costs, whereby power producers near coastal areas would be incentivised to use more of imported coal, thus releasing equivalent volumes of domestic coal for supply to off-coast power stations, it added.

On the other hand, off-coast power producers would be required to pay the import parity price (IP Price) for part of their supply of domestic coal, the Plan panel said.

"This can be enabled by a system of dual pricing of domestic coal....Under this arrangement, bulk of the supplies would continue at the notified price and the balance would be bridged either by imported coal or through domestic coal to be supplied by CIL at import parity price," the Commission said.

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