The coal ministry will rationalise coal prices aligning it with gross calorific value (GCV), so that the price disparity is eliminated across various grades of coal. Coal and power minister Piyush Goyal told reporters that certain grades were not being priced properly. “We need to rationalise pricing based on GCV,” Goyal said.
He made it clear that rationalising coal prices didn’t mean downward revision of coal prices to bring parity with falling international prices. “Indian coal prices were never benchmarked with international prices and any rationalisation will not be aligned with international prices,” Goyal said.
Coal India Ltd (CIL) shifted from useful heat value-based (UHV) pricing to GCV-based pricing prior to its maiden IPO, to price coal on international parity prices. Since CIL offered coal at a deep discount of up to 50%, the company advised the government to change the pricing mechanism so that Indian coal prices were worked out on the basis of market forces and on the basis of international standards. There were even suggestions of a regulator, which would determine Indian coal prices.
“Now that international coal prices are down, the government doesn’t want to link Indian coal prices with international prices,” a West Bengal Power Development Corporation official said. With international prices falling, coal imports have already increased. While Goyal has been saying that the country was aiming at not importing a single tonne of thermal coal, it has imposed a zero duty on imported coal. However, on Friday, Goyal said, “While not importing a single tonne of thermal coal is our larger aim, it may be wise to import coal at the present point of time to keep consumers interest in mind.”
Goyal, speaking at the energy conclave of the Bengal Chamber of Commerce, said India, as a matter of policy, would not follow other countries at least in matters of pricing. He said since 70% of the country’s coal requirement was produced by the government-owned CIL and th e government more or less regulated the price, there was no need for a separate regulator in the coal sector.
West Bengal power minister Manish Gupta said that a regulator was necessary since CIL has a monopoly over the commodity in India and it often drove prices keeping profitability in its mind. Goyal said profitability has to be resolved by efficiency and benefits should not come to CIL through pricing only.
He said CIL saw 10% growth this year and this continued even in the lame months. The ministry was monitoring day-to-day coal and power output and the country at present had surplus of both coal and power. But the mechanism for equitable distribution was still to be in place.