CIL wants power firms to pay full import costs

CIL says it is willing to bridge shortfall in domestic coal supply with imported coal provided power producers agree to pay full import costs.

As senior officials of the coal and power ministries engaged in a verbal duel over fuel supply agreement (FSA) with generation utilities yesterday, Coal India Ltd (CIL) adopted a hard line and said it would bridge any domestic shortfall with imported coal only if consumers were willing to pay full costs.

The prices of imported coal that would be supplied by CIL have become an issue  with power producer, who refuse to pay for additional costs such as freight and port handling charges involved in coal imports.

CIL's stand runs afoul of the power ministry's price-pooling efforts, which is done by mixing domestic and imported coal and calculating an average price. The power ministry has been advancing the Central Electricity Authority formula saying the pooled price would cost less than imported coal.

However, all seven independent directors on the CIL board have taken a firm stand  on the model FSA and put their foot down against government's pressure on CIL into agreeing to bear additional costs for imported coal or price-pooling.

According to the independent directors, supplying imported coal without passing on all costs would amount to using public money to subsidise power producers.