‘Selling imported coal on a notified price by CIL should be implemented’
The Indian Express: Feb 12 2013, 00:37 IST
consideration. Media reports indicate adoption of (gross calorific value) GCV parity as the likely basis, which means that coal of similar GCV from imported or domestic sources shall be priced similarly. This is highly questionable as CIL prices are substantially lower than price of imported coal after adjustment for GCV. Coal prices are deregulated and hence CIL enjoys price advantage. Using GCV parity as the basis shall amount to taking away this advantage without any benefit to CIL. Secondly, while CIL supplies coal from its open cast mines on as mined basis without washing, imported coal is usually washed, which creates a fundamental difference in quality of domestic and imported coal. For any power producer, coal of a particular GCV with variation of +/- 10 per cent is very different from another variety of same GCV with variation of +/-2 per cent. This partly explains the lower price of CIL coal. CIL’s plan to set up numerous washeries is aimed at securing price convergence with imported coal legitimately. It is this initiative of CIL that caught the fancy of institutional investors worldwide leading to unprecedented success of its IPO. Finally, GCV parity shall lead to undue increase in price of domestic coal. Already a few states have raised their voice in this regard.
What is the way forward?
Fortunately, a solution exists that can address the problem of the power producers and also mitigate concerns of the stakeholders. The notified price for higher grades of coal from underground mines of CIL is
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