Power firms likely to get a say in coal price

The power ministry has proposed that representatives of electricity generating companies be included in negotiations with the coal ministry over pricing as the power sector is the largest coal consumer in the country.

The ministry has also proposed that pricing of coal be based on the guidelines framed by the tariff commission till the issue of a coal regulator is resolved. The tariff commission may be asked to come up with a paper on guidelines for fixing coal prices.

The proposals were floated at a meeting held between Power Secretary RV Shahi and Coal Secretary HC Gupta early this month.

"Shahi had said at the meeting that the FSA should provide for a negotiated price to be decided between Coal India Ltd and the power sector," an official told Business Standard today. The group for power sector will have representation from the private sector, as the price will be applicable to private players as well.

"The price will be negotiated every year and there will also be a provision in the agreement that if the two groups are not able to arrive at an agreed, negotiated price, the matter could be referred to an authority in the government mutually agreed between the coal and power ministries," the official added.

Shahi had mentioned in the meeting that determining the price of coal could not be exclusively be left to CIL.

Coal Secretary HC Gupta had suggested that indices like e-marketing price of coal, price of imported coal may also be factored in as benchmarks while negotiating the coal price. Gupta had also said in the meeting that bringing back the administered prices would be a retrograde step.

He had also said that for the same grade of coal different subsidiary companies would have to charge different prices otherwise the system of adjustment through Coal Price Regulation Account would have to be brought back.