State-owned Coal India Ltd (CIL) today hiked thermal coal prices for both power and non- power consumers with immediate effect, a decision which electricity producers said would jack up energy prices by up to Rs 0.50 per unit.
The company has hiked prices of non-coking coal which will raise average coal price by about 8.5 per cent, CIL chairman Gopal Singh told PTI.
The miner said the hike has been made for the survival of the company which requires implementation of cutting-edge new technologies and environment sustainability.
"Intent for this rationalisation of price is that Coal India survives by adopting state-of-the-art new technology, environment-friendly approach, and with the new coal pricing policy, it will bring transparency, simplicity and linearity of prices," Singh said.
The domestic coal prices are still cheaper between 44 and 64 per cent, compared to Indonesian coal, he said.
Prices of seven grades (out of 17) had been lowered by the board in the new pricing.
Sources had earlier indicated that the average price hike could be around 10 per cent but the Indian Captive Power Producers Association claimed that it will be in the range of 15-20 per cent for G-11 and G-14 grade fuel which would make power costlier by Rs 0.30-0.50 per unit.
The company's board at its meeting approved revision of non-coking coal prices with effect from January 9, 2018, CIL said in a BSE filing.
The revision will result in an incremental revenue of Rs 1,956 crore for the remaining period of 2017-18 fiscal while total revenue will be Rs 6,421 crore, CIL said.
Power producers however said that the price hike will increase electricity tariffs.
"This increase for G-11 and G-14 grade (coal) is in the range of 15-20 per cent... It is expected that the coal price increase would result in 30-50 paise/per unit rise in power tariff," Indian Captive Power Producers Association (ICPPA) Secretary Rajiv Agrawal said.
This increase, he said, is over and above 12-18 per cent indirect price increase by introduction of evacuation charge (Rs 50 per tonne), sizing charge and surface transportation charge.
According to Association of Power Producers, thermal coal price rise would amount to power tariff hike of 25 to 30 paise per unit.
"The arbitrary price increases of CIL are burdening the common power consumers. As this increase along with earlier imposition of evacuation charge and increase in surface transportation charge would add about 35 paise in retail (power) tariff," Association of Power Producers Director General Ashok Khurana said.
According to PwC's Kameswara Rao, the higher coal costs will incentivise larger, more efficient plants close to the mines.
Utilities will have take a call on older, inefficient plants, he added.
"Resource companies are raising prices to absorb their own cost increases. The impact is 6-10 p/kWh today but could be lesser as mechanisation grows in future," Rao said.
CIL had last revised price for the fossil fuel in May by 6.3 per cent on an average that helped the miner garner additional revenue of Rs 3,234 crore in 2016-17.
Coal India was the biggest gainer among Sensex stocks, rising by 5.63 per cent to close at Rs 303.05 on BSE. Trading volume in the scrip also soared today with over 2.90 crore shares changing hands on both NSE and BSE stock exchanges.
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