Singareni Collieries Co Ltd, India's second biggest coal miner, will be completely switching over to the new price mechanism based on gross calorific value (GCV) in the next three months, which would result in some price increases for certain higher-grade coal.
The new mechanism will enable SCCL to get better price for higher-quality coal and relatively lesser rate for lower-grade coal. “It will be value for money for our consumers. For us, it will mean better price for better grade,” Mr S. Narsing Rao, the company's Chairman and Managing Director, told Business Line.
Till then, SCCL, which began the process of switching over to the new price mechanism from January 1, will keep the new prices on par with the earlier structure so that there is no revenue and price impact either for the miner or for its consumers.
Quality Grading
SCCL, which produces over 50 million tonnes of coal, is an important supplier of the raw material to NTPC, AP Genco, Karnataka Power Corporation and Maharashtra Genco. Its existing prices range from the lowest (F-grade) of Rs 690 per tonne to about Rs 2,500 per tonne.
It is investing about Rs 1 crore to set up the required facility to grade the coal as per its GCV to fix a price tag – the facility, that includes a laboratory for analysis, will be ready by the end of this fiscal.
All these years, State-run coal miners based their prices based on UHF (Useful Heat Value), measured in terms of kilo-calorie per kg. “The UHV model provides a broad price band width. For example, for C-grade coal, the price band width is between 4,800 and 5,400 kilo-cal, which means coal falling within this band will have the same price tag,” Mr Rao explained.
In the new mechanism, coal will be priced on the amount of calorific value it has and price points change for every 300 points on the kilo-cal scale, irrespective of the ash or moisture content.
After taking a hit in production last year due to the Telangana agitation, SCCL is straining to reach its target of 53.5 million tonnes for this fiscal. “We have so far done 35 mt, which means we have to produce 18 mt in the next three months,” Mr Rao said.