Coal India proposes 10 per cent hike in coal prices

Coal India Ltd (CIL) has proposed a 10 per cent (or around Rs175 per tonne) hike in coal prices to bridge the widening gap between production costs and prices of domestic coal.

Coal prices in India at present range between Rs770 and Rs1,700 a tonne and at that level these are over 50 per cent cheaper compared with international prices of coal.

Coal India chairman Partha S Bhattacharyya said the hike has been necessitated by a major wage revision that resulted in over Rs4,000 crore additional financial burden on the company.

CIL was free to fix the prices of all grades of coal in relation to the market prices with effect from 1 January 2000. CIL fixes the prices of deregulated coal from time to time and the last such revision has been made on 12 December 2007. CIL has not increased prices since then.

The government started deregulating coal prices beginning with those of grades A, B and C, coking coal and semi/weakly coking coal non-cocking coal as far back as on 22 March 1996. Subsequently, on 12 March 1997, the government deregulated the prices of non-coking coal of grade D, hard coke and soft coke and also allowed Coal India Ltd to fix coal prices for grades E, F & G till January 2000, once in every six months, by updating cost indices as per escalation formula contained in the 1987 report of the Bureau of Industrial Cost & Prices. 

Coal India fixes the basic price of coal grade wise at the pit-head excluding statutory levies for run-of-mine (ROM) for non-long-flame coal, long flame coal, coking coal, semi coking coal and weakly coking coal, direct feed coal and Assam coal from various subsidiaries of CIL.
The price hike, though minor, is likely to push up costs for industries like cement, steel and power, where coal is a key input.