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Web Exclusive | June 2013

Power cos may be allowed to pass on extra cost to end users

If Coal India fails to supply the committed quantity of coal to power companies, the Union government may allow the power companies to meet any coal shortfall through their choice and pass the increased cost to end consumers. Power and Coal Ministries have agreed to an arrangement where the generation companies, which have bagged projects through international competitive bidding, will be allowed to import coal and pass on the cost to the consumer in the form of increased tariff.

This move is aimed at breaking the deadlock over signing of Fuel Supply Agreements between power companies and Coal India Ltd (CIL). The companies will be supplied coal from Coal India and if there is a shortfall in that supply, they (firms) can import that much amount either through Coal India or any other means, sources said.

The proposal is likely to be approved in the next meeting of the Cabinet Committee on Economic Affairs (CCEA). In April, CCEA buried a proposal to pool prices of imported and domestic coal owing to sharp opposition to the scheme.

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