Coal price hike hits power sector the most

The power sector appears to be the worst-hit among all the coal consuming industries by the latest rise in domestic coal prices. Following Coal India Limited`s (CIL) move to increase its coal prices, by 11% on an average, the cost of the dry fuel for thermal power generation has increased, from the earlier Rs 700 per tonne, to Rs 777, implying a proportionate hike in the power tariff. On the other hand, the cement sector has had to bear an additional burden of only around Rs 16 per tonne, or around 80 paise per 50 kg bag. As of now, there is no direct impact on the steel sector, as washed coking coal prices for steel plants are negotiated annually, based on prices for imported coal. All of the increase in raw coking coal prices are, thus, currently being borne by coal washeries operating under Bharat Coking Coal Limited (BCC) and Central Coalfields Limited (CCL). 

 In October 2009, CIL increased coal prices by 10% for all grades of coal over the then-existing prices, while for loss making companies, like BCCL and Eastern Coalfields Limited (ECL), a hike of 15% was effected. This excluded, however, Grades A and B of coal supplied from ECL`s underground mines to specific customers. Following suit, Singareni Collieries Company Limited (SCCL) also revised its prices of B, C, D and E Grades of coal.