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JAN 12 2018

CIL to price non-coking coal on per unit calorific value basis

  • Economic Times, ET Bureau / Hyderabad
  • Created: Fri 12th JAN 2018

 

Six years since replacing the erstwhile useful heat value (UHV) based pricing system with gross-calorific value-based pricing, Coal India adopted a new pricing policy on January 9 for non-coking coal, used primarily for electricity generation.

As per the prevailing policy, the fuel is divided in 17 grades, divided by 300 kilo calorie (Kcal) each. Each grade attracts the same price. As per the new policy, to be implemented on or before April 1, “coal sales bill will be raised on per unit calorific value of coal” ( Rs. /Kcal), as is the global practice.

Apparently, the new system should benefit the consumer, as they will be charged precisely for the quality supplied. Currently, consumers getting 4,599 Kcal coal and 4,300 Kcal fuel pay the same price for G-10 fuel. In the future, price will vary for even one Kcal variance in energy value.

In an unsigned communiqué, circulated through a PR agency, CIL claimed the new system will be “transparent”. No public announcement is made on the pricing plan. However, unofficial sources say as per the new system, CIL will divide fuel in seven brands with one price coefficient for each bands.

For example, the most consumed varieties from G10 to G14 — with gross calorific value ranging from 3,101 to 4,600 — will be sold at 23 paise per Kcal basis. It means the power plant getting 3,101 Kcal coal will pay Rs. 713 a tonne, which is lower than the current G14 (3,101 Kcal to 3,400 Kcal) price band of Rs. 748 a tonne.

On the other hand, the power plant supplied with 4,600 Kcal fuel should pay Rs. 1,058 a tonne, higher than the current G10 (4,300 Kcal – 4,600 Kcal) value of Rs. 1,024 a tonne. Fuel of GCV value above 4600 Kcal (currently G2 to G9) will be charged in five different price coefficients ranging from 24 paise/Kcal to 48 paise/Kcal.

The industry welcomed the new pricing system with a pinch of salt. “Apparently this is a good system. But, considering the prevailing rate of grade slippage and the status of their machinery to measure fuel quality, I foresee trouble,” said a power generation official.

Tags

Coal Coal India Limited Power Generation Energy Power Plant CIL Power Electricity Consumer India

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