Domestic coal prices to see drop this fiscal

Domestic coal prices may see a steep hike this financial year as a result of drop in production growth.

The company’s growth in production is likely to be around 2 per cent against a target of 7 per cent.

“We keep coal prices in control by increasing production, but we have lost that control now. Hence, CIL is pressing the government for a hike in prices within this financial year. Production is expected to grow by only 2 per cent against a target of 7 per cent,” said Partha Bhattacharyya, CIL Chairman, on the sidelines of a Bengal Chamber of Commerce & Industry event.

Indian coal prices are 50 per cent lower than international prices, as majority of the coal produced in the country are unwashed.

The shortfall in coal production compared to projections this fiscal would be about 25 million tonnes, while it is pegged at at 40-44 million tonnes next year.

This year the production may rise to 439 milion tonne, while it rose 6.8 per cent to 431 million tonne in 2009-10.

The target set by CIL this year was around 460 million tonne. The company would also see a wage revision by June or July this year.

“We would not be able to achieve the target because of certain rules from the part of government. The ‘go’, ‘no-go’ issue and comprehensive environmental pollution index (CEPI) rules affected us badly. Expansion works in almost nine mines were affected by CEPI regulations,” he added.

The concept of CEPI was introduced in 2009 by the Ministry of Environment and Forests (MoEF) to categorise the environmental quality at given locations.

Based on it, a ban was imposed on development projects in 43 clusters labeled critically polluted as they had a CEPI score of more than 70. Government may have a relook on these regulations by March 31 this year.