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Web Exclusive | March 2013

Implementing coal price pooling may face hurdles

Some analysts feel that the government's move to pool the price of coal may face impediments as the cost of power generation may rise following the implementation of pooling.

Once the price pooling model swings into action, power tariffs for plants located in the east are expected to increase more as compared to the units that are in the western coastal region.

Although units in the east mostly use domestic coal, they will have to pay more for coal under the price pooling mechanism.

Experts say that there are instances where companies are not getting coal linkages and there are few takers for power generated with costly imported coal.

Analysts are concerned that the government intends to start price pooling of coal where high calorific-value imported coal will be blended with domestic coal. The price for this mix would be arrived at by taking the average price of imported and domestic coal.

The move is already casting a shadow on the fossil fuel prices and the rising cost of coal has begun to impact the upcoming power projects.

New capacity expansion plans are in dire straits and plants with a potential of running at more than 90 per cent load factor are running at less than 50 per cent.

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