Govt considering import parity price for domestic coal

The government today said it is considering to price domestic coal on par with global rates, a move which may increase the cost of the raw material and lead to a rise in power tariff.

Both the Coal Ministry and the Planning Commission have favoured using imported coal price as benchmark for domestic coal.
"In the recent price revision exercise, efforts have been made to price higher grades of non-coking coal of Eastern Coalfield Ltd closer to import parity price...it needs to be carried further," Coal Minister Sriprakash Jaiswal told PTI.The domestic thermal coal, consumed by power companies to produce power, are as much as 50 per cent cheaper than the imported coal.
Globally, coal prices start from USD 45 (nearly Rs 2,000) per tonne. 
Coal is the primary source of energy and the power sector alone consumes 85 per cent of the 500 million tonne produced in the country. Other consumers include cement and steel makers.
"In Coal India Ltd (CIL), for pricing of coking coal, import parity price is taken as benchmark and adjusted for quality," Jaiswal said.
Planning Commission Deputy Chairman Montek Singh Ahluwalia termed the need for parity in prices as unavoidable in the wake of the country's increasing coal import needs.
"I would say that (import price parity) is also necessary ...If you are surplus...you can subsidise...but we are coal importers ...our assessment shows that in the XII Plan import of coal would increase substantially. So I think linking (coal prices with global prices) is unavoidable," Ahluwalia said.He said states should ensure the price parity and also advocated shifting to this system for other sources of energy.Increase in coal prices may lead to increase the power tariff by up to Rs 1.50 per unit, according to industry estimates."The essence of the Integrated Energy Policy statement was that it (the price policy) should be consistent across different sources of energy," Ahluwalia added.
Earlier this month, Power Minister SushilKumar Shinde had said that power tariff could go up by about Re 1 per unit (kwh) owing to the government's decision to more than double gas prices to USD 4.20 per mmBtu.