The price revision by Coal India will increase generation tariff of NTPC by 5-6 paise. The impact on retail consumers may be higher.

The decision will also add pressure on the State government-run distribution utilities which are suffering from huge under-recoveries.

Coal India price revision

Beginning today, Coal India rationalised prices of thermal coal used in power generation. Prices of two premium grade (G-3 and G-4) coal have been reduced by 12 per cent. Price of G-5 grade is maintained at the same level. And, prices of all grades from G-6 to G17 have gone up 10 per cent on an average. Overall average realisation is estimated to move up 4.75 per cent.

According to sources, the reduction in top two grades may reduce the overall impact of price rise for West Bengal state power utility and the private sector CESC Ltd. Both consume limited quantities of top grades for old power stations.

Captive segment hard hit

Captive power generation in steel, cement, aluminium and many other such industrial sectors will be even more costly, as thermal coal is sold at a 35 per cent higher price to sectors enjoying the benefit of market determined product pricing.

According to Subhasri Nandi, secretary General of Coal Consumers Association of India, a quick estimate suggests generation cost of captive power units may go up by as much as 22 paise a unit.

“What was the need for such sharp price revision by CIL that posted 35 per cent profit growth in the last (January-March 2013) quarter?” Nandi asked.

Higher price for Rajmahal coal?

Interestingly, according to Nandi power producers using G-8 grade coal mined from Rajmahal area under Eastern Coalfields may have to cough up Rs 300 a tonne more over and above the notified price of Rs 1,250 a tonne.

However, a confirmation on the same was not available from Coal India. The company previously allowed differential pricing for some mines and subsidiaries, including Western Coalfields Ltd.

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