CIL needs to rationalise price of certain grades of coal: Coal Min

Coal prices in India have never been linked to international prices, says Piyush Goyal

At a time when international coal prices are falling, Union Coal and Power minister Piyush Goyal today said Coal India (CIL) needs to further rationalise price of some grades of coal in alignment with gross calorific value (GCV). This may result in decline in prices of some higher grades of coal.

Responding to a question on whether there will be a cut in coal prices, he said: "That is not what we will do. Coal prices in India have never been linked to international prices. But, there is demand from consumers to cut prices. I think, Coal India(CIL) needs to rationalise price of certain grades aligning with GCV."

Coal India switched over from Useful Heat Value (UHV) concept to GCV mechanism to determine coal prices in 2011. According to that GCV mechanism there are 17 grades of coal. However, interpreting Goyal's comment, a CIL official said there could be further break up in band for higher grades of coal, which may result in creation some additional grades. This is primarily an attempt to bring down the price of higher grades of coal, which is mostly imported now especially after recent dall in international coal price.

With about 50 per cent cent drop in international coal prices in last few years, in many cases high grades of imported coal delivered at thermal plants is turning out to be cheaper than similar coal bought from Coal India. While imported coal from Indonesia with high GCV costs NTPC's Farakka plant about Rs 6,000 per tonne including freight, duties and logistics costs, the similar grade of coal from CIL cost about Rs 7,000 per tonne.

A rationalisation of price of high grades of coal likely to address this issue. Goyal, however, ruled out possibility of CIL's profitability being affected due to this rationalisation. "Profitability also depends on factors like efficiency, introduction of new technology, increasing output. We are doing well in all those fronts to take care of profitability," he added, speaking on the sideline of Environment and Energy Conclave, organised by Bengal Chmaber here.