Coal India Ltd (CIL) has proposed a 10 per cent (or around Rs175 per tonne) hike in coal prices to bridge the widening gap between production costs and prices of domestic coal.
Coal prices in India at present range between Rs770 and Rs1,700 a tonne and at that level these are over 50 per cent cheaper compared with international prices of coal.
Coal India chairman Partha S Bhattacharyya said the hike has been necessitated by a major wage revision that resulted in over Rs4,000 crore additional financial burden on the company.
CIL was free to fix the prices of all grades of coal in relation to the market prices with effect from 1 January 2000. CIL fixes the prices of deregulated coal from time to time and the last such revision has been made on 12 December 2007. CIL has not increased prices since then.
The government started deregulating coal prices beginning with those of grades A, B and C, coking coal and semi/weakly coking coal non-cocking coal as far back as on 22 March 1996. Subsequently, on 12 March 1997, the government deregulated the prices of non-coking coal of grade D, hard coke and soft coke and also allowed Coal India Ltd to fix coal prices for grades E, F & G till January 2000, once in every six months, by updating cost indices as per escalation formula contained in the 1987 report of the Bureau of Industrial Cost & Prices.
Coal India fixes the basic price of coal grade wise at the pit-head excluding statutory levies for run-of-mine (ROM) for non-long-flame coal, long flame coal, coking coal, semi coking coal and weakly coking coal, direct feed coal and Assam coal from various subsidiaries of CIL.
The price hike, though minor, is likely to push up costs for industries like cement, steel and power, where coal is a key input.
The government, meanwhile, is looking overseas to bridge the domestic shortfall in high-grade coal.
Union minister of state for coal Sriprakash Jaiswal would be leaving for Australia soon to pursue acquisition of coal assets there.
Coal Videsh, the overseas arm of Coal India Ltd, has already acquired two exploratory blocks in Mozambique and is looking at joint development of coal assets in Australia with companies there.
The country currently produces 450 million tonnes of coal, including 400 million tonnes by Coal India Ltd. It would still need to import 70 million tonnes to bridge the projected 25 per cent shortfall by next year.
India uses coal to fuel thermal power stations of a total generating capacity of over 77,000 MW of power, or half of the country's total installed generating
Source: domain B
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