Coal India to adopt new billing mechanism for consumers from FY19

Coal India (CIL), the world’s largest coal miner, will be adopting a new billing mechanism for consumers from the coming financial year, in line with global practices.

According to the plan, sales bills will now be raised on the basis of the actual consumption of gross calorific value (GCV), expressed as kilo calorie per kg of coal. Currently, consumers are charged on the basis of the coal grade.

Under the existing system, a GCV range is decided for a particular grade of coal, and prices are fixed for that grade. As many as 17 grades with variable GCV ranges are available. The new system, on the other hand, will allow consumers to pay only for the GCV consumed. A Coal India official said the current pricing mechanism for a particular grade was based on the mid point of the GCV range. However, it will be done away with now.

To ensure the same, Coal India will be introducing third-party sampling of all despatches, including auctioned coal. Based on the sampling, a credit or debit note will be issued. In case Coal India supplies coal that falls below the contracted GCV, the company will issue a credit note to the consumer. In the reverse case, a debit note will be issued to Coal India.

Analysts said this mode of billing was prevalent across the globe, but Coal India had been sticking to the GCV range-based gradation and fixed prices accordingly.

“The new system makes the prices much more linear and puts Coal India’s billing system in accordance with global practices. Also, calculating the basic price of non-coking coal of any mine based on its GCV is simpler,” a sector analyst said. Another analyst said Coal India needed to further tighten its control on slippages to ensure that it derived the projected revenue from supplies from a particular mine.

The new system might come into force before the onset of the new fiscal year, if the necessary systems can be put in place in time.

Recently, Coal India increased prices of non-coking coal by 9 per cent on average, from which it expects to earn an additional Rs 64 billion during 2018-19.