Home > Cement, Coal, Power > Coal India raises prices selectively

Coal India raises prices selectively

Reducing the import parity price of coal, Coal India for the first time ever hiked prices selectively.

  • Coal India Ltd (CIL) is increasing its prices. Unlike uniform pricing strategy followed in the past, the price increase has been done selectively with the concept of dual-pricing being rolled out.
  • The logic behind the exercise is to minimise the impact of the price increase, while also protecting CIL’s margins. The impact of the increase on the wholesale price index has been assessed at 0.17 per cent.
  • the price hike would effectively be a three-tiered one, with the impact on the power sector being 7 paise per kilowatt hour.
  • While the power utilities, independent power producers (IPPs), fertilizer and defence sectors are being exempted from a straight across-the-board increase, a 30 per cent hike will become effective for all other sectors whose products enjoy market-driven prices. The increase has been pegged with the floor-level of the spot e-auction prices of coal. “The floor of spot e-auction prices (now commanding an 80 per cent premium) is 30 per cent above present notified prices.”
  • the idea behind introducing this concept was to introduce a differential pricing-system for sectors whose product-prices are market-driven and another for sectors like fertilizer and power whose prices and are not market-driven.

Coal of A and B grades has gone up by 150 per cent, and the rise for the other varieties is about 30 per cent. After the increase, coal would be priced at a discount of about 15 per cent to the imported parity prices.

While Cement & Steel manufacturers will record an increase in raw material costs, CIL is expected to generate additional revenue of Rs 650 crore during the year ended March 2011 and Rs 6,200 crore in FY 2011-12, state media reports.

Categories: Cement, Coal, Power
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