Coal prices will be dearer by R1.7 lakh per railway rake with Coal India increasing the cost for evacuation by an average 39.5%.
This would increase coal prices by an average R43 per tonne across the board, an increase by 10.75% for the lowest grade of coal but less than 1% for the highest grade of coal
CIL issued the notification for increasing the price on November 13 and made it effective from November 14 midnight. This would put all the coal consumers under pressure with power sector getting affected the most.
The price has been marked up on account of transportation charges, one of the key elements of pricing coal at the loading point. A CIL official told FE there are at present 15 applicable elements for pricing coal but the company has only changed the evacuation cost without making alternation in the elements.
According to the notification (available with FE) for coal transported beyond a distance of 3 kms to the loading point, coal companies are entitled to charge surface transport charge from the purchasers.
For a distance of more than 3 km but not more than 10 km to the loading point from pit head, transportation charges have been marked up from R44 per tonne to R57 per tonne.
For a distance exceeding 10 km but not more than 20 km, transportation charges have been increased from R77 per tonne to R116 per tonne. ?In cases where coal is transported more than 20 km to the loading point, transport charges will be payable at actual basis, to be borne by purchasers.
Subhasri Chaudhury, secretary general of the Coal Consumers Association of India, said although CIL would not call it a price revision, coal prices across all categories have actually gone up, which would have a cascading effect on the entire economy.
With each rake carrying 4,000 tonne, the effective price increase would be R55,000 per rake for a distance up to 10 km.
For a distance of up to 20 km, the effective increase would be R1.7 lakh per rake and this means the power sector would be under pressure, she said adding most loading points were 20 km away from the pit heads.
The price notification has also imposed additional charges for special sizing and beneficiation but that would be negotiable with the consumers.
But all coal loaded would be considered as steam sized coal of 25 mm plus and the price applicable for it would be R180 per tonne. Chaudhuri said this was also applicable at present but only for coal whose size was 25 mm plus.