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Sunday, January 29, 2012

CIL set to reduce coal prices this month

Sunday, 29 Jan 2012

Coal India Ltd the biggest coal miner in the world, will announce the new set of coal prices this month, before the acting chairman Mr NC Jha retires on January 31st 2012. The decision comes after the ministry formally asked CIL to relook its January 1 pricing.

Mr Jha in an informal interaction said that "We were planning to revisit the pricing in March. But the coal ministry had formally sent a letter on January 25 asking us to relook the prices now to prevent any major impact from the previous prices regime. But, GCV (Gross Calorific Value) mechanism will not be rolled back.”

Mr Jha added that "The revised GCV pricing will be done in consultation with coal ministry officials within end of the month adding that January 1 pricing was also done with the ministry's consultation. As switchover from Useful Heat Value concept to GCV had happened under me, so I'll address the price issue before I retire.”

He added that the revised pricing that CIL is working on would benefit or reduce the price shock mainly in C, D, and upper E grades of coal under UHV category.

Mr Jha accepted that the January 1 pricing benefited CIL by close to 12.5% in additional revenue and the new pricing will eliminate most of it. Besides, he said, the new wage agreement will have additional burden of at least INR 4,000 crore annually at a time when CIL production is slipping from the target.

The revised GCV pricing of the coal will deviate from the Coal ministry's and Planning Commission's long term roadmap to link Indian coal with international coal. Mr Jha said that "The January 1 pricing was based on discount on import price but now the pricing would be done on what the consumers were paying in UHV regime.”

CIL had attempted to reduce the gap of landed international coal price with domestic coal which was as high as close to 75 per cent in certain coal varieties like C, D and part of E grades. However, Jha conceded that gradually, the new concept will achieve its goal gradually in future.

Asked about large number of complaints about high ash and moisture content and inconsistent quality in CIL coal compared to international coal, Mr Jha said "for that we have kept band of 300 kcal for each band of grades, while, price for international coal changes in narrow band of 50 kcals".


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