Coal India rolls back price hike

Feb 01 2012, 01:06 IST
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Summary* Company says will de-link the rates from international parity prices

Amid protests from coal-rich states like West Bengal and Jharkhand, state-run Coal India Limited (CIL) today temporarily rolled back the hike in prices of coal, weeks after having switched over to the new Gross Calorific Value (GCV) based pricing mechanism. Giving the much-needed reprieve to its buyers, CIL said it will delink the rates from international parity prices arguing that this would eventually reduce the prices for different grades of the fuel.

The new pricing policy, which was introduced on January 1 would come up for review after March, had led to an increase of 5-12 per cent for various grades, but outgoing CIL chairman Nirmal Chandra Jha said delinking domestic coal prices from global rates would help offset a projected 11-12 per cent rise in prices to be implemented with retrospective effect from January 1.

Asserting that switching over to GCV-based grading of coal from the Useful Heat Value (UHV) mechanism will continue, Coal Minister Sriprakash Jaiswal said, the GCV mechanism will be revenue neutral and a review would be done will be done after March. Consumers from various sectors including power and cement have protested against the GCV system saying it implies a huge revenue outgo for them. So let us see under the new system how the situation grows, Jaiswal told The Indian Express.

Opposing the GCV system, the West Bengal government described it as worst and anti-people and has demanded that the Centre defer its implementation until a regulator for the coal sector is in place. It would be near impossible to pass on this huge increase in the cost of coal to the retail consumers of electricity, the states power secretary Manish Gupta said in a recent letter to Jaiswal. A senior Jharkhand government official too said that the Arjun Munda government had similar apprehensions. The companys board which met yesterday approved the GCV system and allowed categorisation of the fuel into 17 different bands depending on their calorific value.

Under pressure

* West Bengal and Jharkhand had lodged protest against the new GCV-based pricing mechanism

* The new pricing policy, introduced on January 1, had led to an increase of 5-12% for various grades

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