New Delhi, June 21 (KNN) Government today decided to allow pass-through by power generation companies of higher cost of imported coal, a move which will raise the cost of electricity for consumers.

This decision was taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA) presided over by Prime Minister Manmohan Singh.

“Higher cost of imported coal to be considered for pass-through as per modalities suggested by Central Electricity Regulatory Commission (CERC). Ministry of Coal to issue suitable orders supplementing the New Coal Distribution Policy (NCDP). Ministry of Power to issue appropriate advisory to CERC including modifications if any in the bidding guidelines to enable the appropriate commissions to decide the pass through of higher cost of imported coal on case to case basis,” said an official statement here.    

The decision comes in the wake of leading power sector players such as Tata Power, Reliance Power and Adani Power seeking revision in the tariff by re-opening the power purchase agreements which they had signed with the state utilities in Gujarat, Andhra Pradesh and Haryana.

The issue is pending before the CERC.

Earlier, in Feb 2013, CCEA had laid down certain guidelines for import of coal on cost plus basis and pooling of prices and directed formation of an Inter-Ministerial Committee (IMC) to consider the cases of power plants.

On the basis of the recommendations of IMC, the matter was further considered by CCEA in April. The CCEA inter-alia directed to consider the feasibility of higher cost of imported coal being allowed as a pass through in case of Power Purchase Agreements (PPAs) signed on competitive bid basis. (KNN)