Agree to price-pooling or 65% supply: Coal India.

Coal India   has put the ball squarely in the power companies' court. They have to either agree to price pooling or 65% supply. Speaking exclusively to CNBC-TV18's Amrita Panja, Coal India CMD S Narsing Rao said that Coal India was not under any obligation to supply beyond 65% even if a consensus on coal import is not reached.

The penalty structure for a coal supply shortfall is in place. But Coal India does not feel it will have to pay any penalties. As long as it meets its indigenous production target as per the revised fuel supply agreements and supplies 65% of domestic coal. The PSU says power companies will have to agree to the higher cost of imports and price-pooling.

S Narsing Rao CMD, Coal India, said, "If there is no consensus among the power producers to bear the additional price on account of import and pooling now, there may not be any obligation for us to supply beyond 65%. Our commitment is 65% of the FSA quantity from the indigenous source and the penalty regime will remain the same. The level of 65-80% is essentially based on the premise that there will be import of coal to meet that extra 15% and if that doesn't happen due to some reason, the commitment of Coal India still remains at 65%."

Around 40 FSAs are yet to be signed and Coal India insists that imported coal will not be sold at a concession.

"If we import, we will have to sell it at imported prices. And if we sell it at imported prices, there will not be many who may be interested. So power companies might as well import instead of importing through Coal India."

It is now up to the CEA and the power and coal ministries to build consensus in this regard. But for Coal India, the next big concern is coal-import contracts. And given the scarcity of avenues for this, CIL's sub-committee on coal imports and foreign acquisitions has its hands full.

Source : moneycontrol.com