Home / Economy / Govt, CIL consider coal price revision

NEW DELHI : In anticipation of yet another high-demand season for electricity during April-June, the central government and state-run Coal India Ltd are considering revising the price of coal for the power sector and other industries that consume the fossil fuel.

Two people aware of the development said discussions are preliminary and that no decision has been taken yet. Coal India has kept its prices largely unchanged for nearly five years now across different grades of coal.

“Prices are mostly market-driven for commercial, captive and imported coal. They are notified for the power sector. High-level talks have taken place. The revision would depend on several factors," said one of the persons.

The talks come against the backdrop of an increase in input costs over the years, with an accelerated hike in the past two years. In the past one-year, international coal prices have surged to record levels.

“Coal India has kept prices unchanged for five years now, despite the increase in various cost inputs, especially diesel and explosives. Even in this backdrop CIL’s PAT (profit after tax) for H1 was at a record high," said a Coal India official in response to an emailed query.

The official further said: “However, the idea is we have to be adequately compensated and whatever be the increase it should take care of our Ebitda (earnings before interest, taxes, depreciation and amortization). We will also consider the impact on price of energy in the country because coal price increase has a cascading effect on various factors. We will take all our stakeholders on board and endeavour to balance the price increase judiciously. To draw a timeline on this is not possible."

The final decision on the matter would be taken by the CIL board, which also includes government nominees.

Queries mailed to the coal and power ministries remained unanswered till press time.

Addressing shareholders at the 48th annual general meeting meeting in August last year, Coal India CMD Pramod Agrawal said the company has not raised prices in the previous four years to ensure its supply at competitive prices to consumers compared to international sellers. He said the miner is committed to increasing its production and supplies to mandated levels to ensure the country gets power at a just price.

“At a time when international coal prices are much higher, Coal India continues to supply its coal to Indian consumers at highly competitive prices, with no price increase over the last four years," said Agrawal.Any revision in price is likely to have a cascading effect on inflation as it would impact power prices, thereby affecting both household and industrial expenditure.

The power sector would be the most impacted as India’s power generation is still mostly based on the fossil fuel. Currently prices for the power sector are kept 20% lower than the price of coal for other industrial sectors.

Rituraj Baruah
Rituraj Baruah is a senior correspondent at Mint, reporting on housing, urban affairs, small businesses and energy. He has reported on diverse sectors over the last six years including, commodities and stocks market, insolvency and real estate. He has previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.
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