Mild increase in coal prices | PSEB Engineers Association

Mild increase in coal prices not a worry for thermal power companies

V K Gupta

01 February, 2012
The power companies in thermal power generation business may not be affected much after a mild increase in E & F grade coal.

THE REVISED price hike announced by Coal India Ltd (CIL) yesterday effective January 1 may not have major price increase on power sector companies using grade E & F coal.

CIL announced that new GCV-based grading of coal will continue as this mechanism is in line with the international norms. Last month an average price increase of 12.5 % was announced and now it is revenue neutral for the company.

CIL decision to benchmark pricing for non-coking coal to gross calorific value (GCV) from the current useful heat value (UHV) based gradation is likely to have a mixed impact on the consumers` wallet, especially in the power sector. There will be different price increase for different consumers in power sector which consumes 70% coal mostly E & F grade.

Price increase is likely to sharp for highest GCV bands within the E and F grades. Further all the subsidiaries of CIL will have uniform pricing system. Power companies getting coal from Western Coalfields Limited (WCL) and Eastern Coalfields Limited (ECL) would gain while consumers of Mahanadi Coalfields Limited (MCL), South Eastern Coalfields Limited (SECL) and Northern Coalfields Limited (NCL) would have to pay more.

Power companies using better quality coal for blending will have to pay more as price increase for A to D grades will see an increase of 80 %.