Price hike by Coal India will hit power tariffs, warns NTPC

National Thermal Power Corp, the country's biggest power producer, has warned that any price hike by Coal India Ltd would result in a considerable escalation of costs and result in tariff hikes.

Both companies are state-owned.

Coal India (CIL), which produces 81 per cent of the country's total coal output, has implemented a new pricing mechanism from 1 January that steeply hikes prices for power producers.

''The power generation cost for NTPC could go up by about 40 per cent on account of the new pricing system,'' NTPC chairman and managing director Arup Roy Chaudhary told reporters on the sidelines of the India Energy Conclave in New Delhi.

Since the fuel cost is a 'pass-through', the impact will be directly on electricity consumers, he added.

The new pricing mechanism adopted by CIL is based on the 'gross calorific value' (GCV) of coal. Earlier, it based prices on the 'useful heat value' (UHV) of coal, which deducted ash and moisture content from the standard formula.