Coal India halves premium charged for power plants with linkages

Coal India Ltd (CIL) has quietly cut effective prices of coal sold to power plants having own mines following growing protests from the industry as well as the power ministry.

The near-monopoly coal miner has halved the steep 40% premium charged to power plants with tapering linkage for having own coal blocks.

“Coal India board has reviewed the provision for charging add-on price of 40% for supplies of coal to power plants having tapering linkages after completion of normative date of coal production of the captive blocks. The board has decided that the revised add-on price shall now be chargeable at 20% over and above the applicable rates for supplies under the tapering linkages beyond the normative date of production of the captive block,” CIL has said in an internal communications to its sales offices.

The power industry, however, is still not happy with the 50% reduction in quantum or premium, which it demands to be abolished altogether.

“What has been done is correct but there is no victory (for the power industry). It is wrong to think of it that way as there is not rationale for the premium, which, in fact, would be zero. Every addition (to notified prices) adds to consumers’ cost of power,” Ashok Khurana, director general of Association of Power Producers told dna.

The cut in the premium over notified prices on supplies to power plants whose own coal blocks have started production comes in the wake of the decision taken at a meeting of central coordination committee that was attended by ministries of power and steel, department of industrial policy and promotion, among others.