Coal prices may be corrected this month

Some analysts said the fact that the ministry is reviewing prices in the wake of protests is a pointer to a cut in prices or some sops for power producers

Coal prices may be “corrected this month”, a senior official in the coal ministry said on Monday, but did not specify if it could mean a downward revision as demanded by power producers.

“There could be a rationalization,” said the official, who did not want to be named. “It could be this month itself. The board of Coal India Ltd has to take a decision.”

Coal India, that supplies 80% of India’s coal, introduced a new gross calorific value-based pricing mechanism on 1 January, but consumers said the company also simultaneously raised the prices of coal by 5-20% in an opaque manner. On Friday, coal secretary Alok Perti said a meeting was held to review the prices, but he did not say if lowering them was being considered. “We are in discussions,” coal secretary Alok Perti had said after the meeting. “The gross calorific value-based system will stay. Our discussions are over pricing.”

Some analysts said the fact that the ministry is reviewing prices in the wake of protests is a pointer to a cut in prices or some sops for power producers. But there were also sceptics who said a cut in coal prices would be a surprise as prices in the global markets are on an upward trend. “There is an upward pressure coming from unavailability of coal and the fact that the deficit is imported,” said Shubhranshu Patnaik, senior director at Deloitte Touche Tohmatsu India Pvt. Ltd. “Coal India’s prices are still 25-30% lower than international prices.”