Energy-rich states may benefit from projects

Planning Commission member Kirit Parikh's report on integrated energy policy has recommended that states from which resources like coal is extracted for any energy enterprise be given a share of the profits from the projects.

Among other recommendations, it has also suggested providing an opportunity to states or its residents to invest in such projects on equal terms and appropriately revise the royalty rates. The policy will be submitted to Prime Minister Manmohan Singh by this week for his approval.

The proposal to give states where energy sources such as coal are located a better deal has been suggested in the backdrop of demands by states for higher share of benefits from the domestic energy resources.

"This solution has been suggested for removing hurdles in exploiting domestic sources of primary energy. The policy has recommended that the National Development Council must take up this issue immediately in respect of coal and hydro resources," a Planning Commission official said.

The policy has also recommended that a national policy on domestic natural resources be formulated and enacted in Parliament.

Ensuring adequate supply of coal with consistent quality along with sufficient gas supply, power sector reforms, using energy abroad and increasing the role of nuclear and hydroelectric power generation are among the major recommendations.

The policy has also recommended stepping up domestic coal production by allotting coal blocks to the central and state public sector units and captive mines of notified end users.

"Coal blocks held by Coal India Ltd that can not be brought into production by 2016-17, either directly or through joint ventures, should be made available to other eligible candidates for development and for bringing into production by 2011-12," the policy states.

The policy also says infrastructure must be created to facilitate thermal coal imports to facilitate coastal power generation capacity based on imported thermal coal.

"A system of pricing coal on its gross calorific value must replace the current system of pricing coal on the basis of broad bands of its useful heat value," it states.

The current system of coal linkages should be replaced by long-term coal supply agreements with strict penalties for not meeting contracted supplies, quality and offtake commitments, the policy suggests.

Throwing light on the coal regulator, the policy says coal must be brought under independent regulation.