Coal India (CIL) may make an upward revision of prices by the fiscal end in view of the escalating cost for coal production.
S Narsing Rao, CIL chairman and MD, said Prime Minister Manmohan Singh pitched for a hike in the coal and power prices in the last National Development Council (NDC) meeting. ?We will not have to take the coal ministry?s clearance for a price revision. It is well within our domain,? Rao said after the board meeting on Wednesday.
He, however, made it clear that the issue was not discussed in the meeting and didn?t want to disclose when the board would take a call. He said there has been considerable increase in the cost of production and the increase in diesel prices alone made a huge impact.
?For every rupee of diesel price increase, CIL is facing an impact of R110 crore,? Rao said. He gave clear indications that prices would have to be revised to ease pressure on margins. CIL made the last official price increase in February 2011 but it was not across the board increase. The coal major increased prices by 35% for the non-power sector. Prices of A & B grades of coal were marked by nearly 150%. Majority of the power producers don’t use A and B grades of coal so the power sector in general didn?t have to face the heat of a hike.
But in January after CIL shifted from useful heat value (UHV) based coal pricing to gross calorific value (GCV) based pricing, prices of all category of coal went up between 50% and 180%. CIL, though, termed the entire exercise as revenue neutral.
Rao admitted that many power producers such as DVC were not paying the balance of the increased price that happened because of shifting to GCV. Although many power producers did not agree to the new GCV pricing, it is the established price now after running for over a year, Rao said.
On pending fuel supply agreements (FSAs), he said NTPC has not yet committed a date to sign the FSAs though in December 10 it said it would complete it in a month.
CIL has so far signed 38 FSAs for power plants coming up between 2009 and 2015. It will require signing another 18 FSAs, of which 13 are with NTPC. The power major will have to sign FSAs with all the 7 CIL subsidiaries.
Rao said even if the plants were not signing FSAs, they were continuing to get coal under MoU, which had no penalty obligations. CIL is currently supplying 35 million tonnes of coal under MoU.
