The Board of Directors of Coal India (CIL) on Tuesday approved an 8 per cent hike in non-coking, or thermal, coal prices with effect from May 31, 2023. CIL is expecting to earn an incremental revenue of Rs 2,703 crore for the balance period of the financial year 2023-24 following the hike in prices.
“The board has approved a price increase of 8 per cent over the existing notified prices for high-grade coal of grade G2 to G10… This will be applicable to all subsidiaries of Coal India Limited, including NEC, for regulated and non-regulated sectors. Due to this revision, CIL will earn approx. incremental revenue of Rs 2,703 crore for the balance period of financial year 2023-24. All add-ons would be as per the extant practice,” the CIL said in an exchange notification.
In a recent interview to
Business Standard, Pramod Agrawal, CMD, CIL, had confirmed plans to hike coal prices. CIL’s previous price increase was in January 2018. Since then, the company had absorbed much of the inflationary costs, especially on diesel and explosives, without revisiting our prices, he had said.
“CIL as a whole has been able to sustain a strong financial bottomline so far. But only some of the CIL’s arms are achieving profits, while others, especially Eastern and Western Coalfields Ltd, Bharat Coking Coal, are feeling the financial pinch and may not be able to finance their future projects unless there is adequate compensation,” he had said.
To take on the challenging output and offtake targets, it is essential that suitable capital is in store to invest in mining and rail evacuation projects. “There is a credible argument for price revision. However, we will take a balanced approach as an increase in coal price will have a cascading effect on various commodities. We will take a call on coal pricing with stakeholders on board. The aim is to protect our EBITDA and shield the nation from the impact,” Agarwal said.
The increase in coal prices comes at a time when the country is facing record high electricity demand. India touched record high demand of 220 Gw on May 16. The price hike of coal will increase prices of coal.
Several state-owned power distribution companies have proposed a hike in power tariffs in their annual filing, as coal prices have gone up due to high demand and rise in imported coal.
The domestic coal price hike will raise fuel cost further for power generators, which is passed on to electricity consumers.
The Union Ministry of Coal has set a target to produce 1 billion tonne (BT) coal in the country by the end of the current financial year, on the back of enhanced private coal mining. Of the targeted 1 BT, CIL will produce 780 million tonne (mt), while privately owned captive and commercial mines will contribute 162 mt, and the rest by Singareni Collaries.
(With inputs from PTI)
