New Delhi: West Bengal and Andhra Pradesh have rejected a proposal for the pooling of prices of imported and domestic coal by state-owned Coal India Ltd for selling to its clients.
Other states have indicated they don’t want such a system as it could raise power prices for consumers, said a senior official of the coal ministry, which is likely to kill the proposal being pushed by power companies to get cheap coal.
“Coal India directors had taken a stand that if they want coal to be imported by them, they would sell it at cost-plus basis (market price) and that means it would be passed on to the buyers,” said the official, who declined to be named. “States generally don’t want it because the prices of coal and power would go up.”
“Even the Uttar Pradesh government is set to reject it,” said another official close to the process of evaluating state responses.
In September, the coal ministry had asked for feedback from power-producing states on the idea of pooling the prices of domestic and imported coal in the ratio of 65:15 but on condition, put forward by Coal India, that the price of imported coal was passed on. West Bengal and Andhra Pradesh have submitted their rejection in writing.
“If the government does want price pooling of coal that hurts the bottom line of Coal India, they should bring out a presidential directive and specify who will bear the subsidy that may amount to Rs60,000 crore in 20 years so that the directors of Coal India are absolved of the responsibility,” said a company director on condition of anonymity.