Leave coal prices to market, allow free trade: Plan panel

Written by Press Trust of India | New Delhi | Updated: Aug 31 2009, 06:13am hrs
The coal pricing may see a complete revamp and the sector may enter into a free trade zone, if suggestions of the Planning Commission are implemented.

...Coal prices should ideally be left to the market and trading of coal, nationally and internationally, should be free, the Commission said advocating export of coking and non-coking coal and suggested benchmarking export prices with import rates.

Although coal prices were de-regulated in 2000, its price is fixed by state-owned companies under the guidance of the coal ministry. Navratna PSU Coal India, which accounts for more than 80% of the countrys total coal reserves, last raised coal prices in 2007 by 10%.

Reviewing the Integrated Energy Policy, the Plan panel said, High quality coking and non-coking coal, which are exportable, should be sold at export parity prices as determined by import price at the nearest port minus 15%. Since a substantial amount of coking coal is imported, domestic coking coal should be priced at import parity price, it added.

The matter is likely to be taken up during the full Planning Commission meeting, headed by Prime Minister Manmohan Singh, on September 1, sources said.

When sought comments on Plan panels suggestions, Coal India chairman Partha S Bhattarcharyya said, That is an excellent suggestion. We are very happy. The Planning Commission has also suggested for a shift to gross calorific value basis (GCV) for coal pricing instead of the present useful heat value (UHV).

Coal prices should be made fully variable based on GCV and other quality parameters instead of the current system of pricing on the basis of broad bands of UHV, it suggested.

It said that the coal ministry has so far not adopted the system of GCV and as a step towards migration from UHV to GCV for pricing of domestic coal, the ministry will reduce the bandwidth of current UHV grades in coal limiting them to 300 kilo calories on a trial basis from dedicated coal mines to NTPC power house where automatic sampling arrangements are available at both ends.

The 11th Five-Year Plan (2007-12) has also envisaged ... pricing of coal based on its gross calorific value will be promoted.