Get Ready to Pay More For Electricity as Coal India Hikes Prices

New Delhi: State-run Coal India on Tuesday hiked thermal coal prices for both power and non-power consumers with immediate effect, a decision which electricity producers said would jack up energy prices by up to Rs 0.50 per unit.

Sources indicated that the average price hike could be around 10 per cent but the Indian Captive Power Producers Association claimed that the hike is in the range of 15-20 per cent for G-11 and G-14 grade fuel which would make power costlier by Rs 0.30-0.50 per unit.

The board of Coal India Ltd in its meeting approved revision of non-coking coal prices with effect from January 9, 2018, Coal India (CIL) said in a filing to BSE, without disclosing the quantum of increase.

The price revision will result in an incremental revenue of Rs 1,956 crore for the remaining period of 2017-18 fiscal while total revenue will be Rs 6,421 crore, Coal India said. The price hike will be applicable to "all subsidiaries of Coal India, including NEC for regulated and non-regulated sectors", the filing said.

Power producers, however, said the price hike will increase electricity tariffs. "This increase for G-11 and G-14 grade (coal) is in the range of 15-20 per cent...It is expected that the coal price increase would result in 30-50 paise/per unit rise in power tariff," Indian Captive Power Producers Association (ICPPA) Secretary Rajiv Agrawal told PTI.

This increase, he said, is over and above 12-18 per cent indirect price increase by introduction of evacuation charge (Rs 50 per tonne), sizing charge and surface transportation charge.

"For global competitiveness, energy prices has to come down whereas the nation is being burdened by ineffectiveness of Coal India, its manpower, cost structure and losses," he explained.

According to Association of Power Producers, thermal coal price rise would amount to power tariff hike of 25 to 30 paise per unit.

"The arbitrary price increases of CIL are burdening the common power consumers. As this increase along with earlier imposition of evacuation charge and increase in surface transportation charge would add about 35 paise in retail (power) tariff," Association of Power Producers Director General Ashok Khurana said.

According to PwC's Kameswara Rao, the higher coal costs will incentivise larger, more efficient plants close to the mines. Utilities will have take a call on older, inefficient plants, he added.

"Resource companies are raising prices to absorb their own cost increases. The impact is 6-10 p/kWh today but could be lesser as mechanisation grows in future," Rao said.

CIL had last revised price for the fossil fuel in May last year by 6.3 per cent on an average that helped the miner to collect additional revenue of Rs 3,234 crore in 2016-17.

Coal India slapped a levy of Rs 50 per tonne as coal evacuation charges in early December.

Meanwhile, Coal India also said sales bills will be raised on GCV (kcal/Kg) basis with effect from April 1, 2018 and the present mode of raising bill would continue till then.

Coal India was the biggest gainer among Sensex stocks, rising by 5.63 per cent to close at Rs 303.05 on BSE. Trading volume in the scrip also soared today with over 2.90 crore shares being traded on both NSE and BSE stock exchanges.