Ministry seeks import price parity for domestic coal
01 Jun 2010
Close on the heels of a hike in the prices of domestic prices of natural gas supplied by state-run Oil and Natural Gas Corporation and GAIL announced last week by the government, the coal ministry is now seeking international price parity for thermal coal.
The coal ministry as also the Planning Commission have favoured using imported coal price as benchmark for pricing domestic coal, a move that would result in a hike in coal prices.
With the domestic prices of thermal coal consumed by power generating companies ruling 50 per cent below international prices of the commodity, price parity would effectively mean a doubling of coal prices in the country.
The combined effect of the hike in the prices of natural gas and coal - both feedstocks for thermal power plants, would be further hike in the power tariff.
The hike in natural gas prices is expected to push up power tariff in the country by a minimum Re1 per unit and the hike in coal prices would lead to another Rs1.50 per unit increase in power tariff, according to industry estimates.
"In the recent price revision exercise, efforts have been made to price higher grades of non-coking coal of Eastern Coalfield Ltd closer to import parity price," coal minister Sriprakash Jaiswal said, adding, "it needs to be carried further."
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