SCCL may increase coal prices to power plants

The state-owned Singareni Collieries Company Limited (SCCL) is mulling rate hike on coal supplies to power plants, which accounts for 72 per cent of the total coal produced by the company, as the rising costs impacted the bottom line in 2010-11.

SCCL chairman & managing director S Narsing Rao on Friday said the company would take a call on increasing the price of F-grade coal after consulting the government later this year.

The company had revised the price of F-grade coal only once in the last ten years by a marginal 5 per cent increase in 2004, which stands at Rs 750 per tonne as compared to the average price realisation of Rs 1,610 per tonne to the company.

The company’s net profit was down 11 per cent to Rs 320 crore for the year 2010-11 as compared to Rs 360 crore in the previous year, though the total turnover rose by 14 per cent to Rs 8,936 crore. He said the increase in costs, mainly on account of higher wage bill among others, was responsible for pulling down the profit levels.

The company has achieved a total production of 51.33 million tonnes during FY 10 as compared to the actual target of 50.5 million tonnes, while the average cost of production rose to Rs 1,451 crore from Rs 1,384 crore in the previous year.

The company has been keeping the price on coal supplies to power projects very low as any upward revision of price will impact the generation cost of the state power utility, APGenco, which has already been under severe financial stress on account of subsidy overdues from the state government.

Besides the cost escalations, the company is also considering the price revision in the light of recent increase of coal prices by the Coal India Limited. “We want to arrive at some parity with the prices of Coal India Limited,” Rao said at a press conference.