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Tuesday, January 3, 2012

Coal price hike will hit power utilities hard in India

Tuesday, 03 Jan 2012

It is reported that the hike in coal prices from January 1 will hit the power utilities hard. The worst affected will be power units in the east as Coal India Ltd will levy 6% extra on coal from Eastern Coalfields Ltd as it is a sick subsidiary and listed with the Board for Industrial & Financial Restructuring. ECL supplies coal to both CESC and WBPDCL.

The restructuring followed an approval to the long-pending proposal by the board of directors at CIL recently. Though CIL chairman Mr NC Johan said the new mechanism would have a minimum impact on consumers, he said it would have a positive impact on company revenue.

Mr Johan said "We've ensured that no coal-producing company will lose in revenue due to the restructuring. However, if some company manages to increase the quality of coal produced, it will command a higher price for coal, adding that the new system does away with the anomalies in pricing of same grade coal produced by different collieries and subsidiaries.”

Mr Johan claimed that even after the revision, coal price would be 77% lower than the international prices for power, fertilizer and defence and 25% for others.

Power department officials expressed dismay over the decision


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