The earlier model, proposed by the Central Electricity Authority, involved sharing of 25% of the cost of imported coal equally by all power generators, which would have been eventually passed on to consumers. The remaining cost of imported fuel was to be borne by individual power generators.
The government had asked Coal India to come up with an alternative price pooling mechanism after the one suggested by CEA was rejected by most power distribution companies. Coal India, however, said the new model needs some fine-tuning.
"We are working on it and it will have to be fine tuned to include all possible scenarios," a senior Coal India official said. "We are proposing this new model, which will have to be discussed with CEA and the distribution companies." The model will be submitted soon to the coal ministry, which will take it forward, the official said. It is, however, still not clear how Coal India will arrive at one price for the different categories of coal produced by its mines.
The Coal India board had earlier approved the modified fuel supply agreement (FSA) without price-pooling with 65% domestic coal and 15% imported coal at cost plus basis. This offer was for power companies that have set up plants between January 2009 and March 2015.
The miner has, in fact, sought approval from power generators to import coal on their behalf. According to estimates, Coal India will see a supply shortfall of 26-42 million tonne to meet 80% of contracted coal requirement of power units between now and 2014-15.
This shortfall will have to be met through imports. The calculation is based on the requirement to supply coal to some 60,000 mw of power units between 2009 and 2015. For units that have come up prior to 2009, Col India has committed a fixed quantity, which will meet about 90% of these units' requirement.