The government-owned Coal India (CIL) has rolled back the price hike that came into effect after the company shifted to new pricing mechanism based on gross calorific value (GCV) from useful heat value (UHV) earlier this month.
While the company will continue with GCV based grading of the product, it will not link the prices with international rates. ?Overall price increase from the new pricing was about 12.5%. Since there was a huge reaction, we have replaced that pricing with the new one,? N C Jha, chairman, CIL told reporters on Tuesday.
The price roll back would be effective from January 1, 2012. The company will
review the impact of new system after March and if it has an impact on revenues are, prices will be revised
accordingly.
Coal minister Sriprakash Jaiswal said, the new pricing will be revenue neutral and therefore, will have no impact on company?s balance sheet. ?The GCV mechanism will be revenue neutral. We will assess the impact of this price cut but after March.
If there is any impact
on CIL?s revenue, we will revise it,? he said.
The country?s largest coal producer moved to GCV based pricing on January 1. Under GCV, coal was categorised into 17 grades instead of 7 that was under UHV method. This led to huge protests from consumers including power, cement and steel companies that expected the coal prices to go up by around 12.5%.
Though, with the new pricing, CIL?s overall revenue will not be impacted, for some of its subsidiaries, the price cut will lead to losses.
? The worst affected will be Western Coalfields (WCL). To off set that, the company will charge 10% more than rest of the subsidiaries,? Jha said. For WCL, the price cut is estimated to incur a loss of around R450 crore per year.
India has about 10% of the world?s coal reserves. CIL meets 80% of the country?s coal requirement. The company has a target of producing 464 million tonne coal during 2012-13.
Beside pricing, CIL has also been struggling to reach consensus with its employees unions on wage revision. Jha said, issues with the unions have been resolved too. The company has agreed to hike the minimum guaranteed benefits for its around 3.5 lakh workers from 24% to 25%. It would offer an additional 4% of the basic salary as special allowance to the non-executive employees. ?There were five-six major issues. We have resolved all of them,? he said.
The unions had demanded various incentives such as pension scheme and medical benefits for retired executives and annual increment of 3% of the basic salary. ?We have agreed to provide all of that,? Jha said.
The wage revision would put an additional burden of R6,500 crore on the company which already has a wage bill of over R10,000 crore per year. Jha said that the company would see, how can this extra expenditure be absorbed.
?We have a profit of R10,800 crore. So, this burden can be absorbed fully without incurring losses. But, there are shareholders too. We will see how we can go about it,? he said.