Coal India’s new pricing rule faces opposition
Coal India’s new pricing system faces strong opposition from consumers across the country as it has pushed fuel costs up by up to 70% for the small and medium steel and cement industries that face a shutdown now.
Power companies too are facing the heat and said that tariffs would rise by at least 40% to factor in the price hike.
Since January 1, Coal India has begun pricing coal based on gross calorific value or heat produced by burning it. Earlier, prices were fixed based on moisture and ash content present in coal.
The pricing mechanism will be reviewed after three months. Steelmakers alleged that Coal India was misusing its monopolistic position to profiteer without taking stakeholders’ views, but a coal ministry official termed the new pricing policy as the most consumer-friendly reform by Coal India ever and said that it is globally accepted method and will lead to improvement in quality of coal.
Industry representatives from Chhattisgarh, Karnataka, Jharkhand, West Bengal, Orissa and Andhra Pradesh met coal secretary Alok Perti on Tuesday to convey their grievance.
“Worldwide, coal pricing is done after taking out intrinsic impurities and a universally-accepted analysis. Coal India started the new pricing policy without proper analysis. The company is misusing its monopoly to earn hefty profits. All small and medium enterprises will be wiped out,” Chhattisgarh Sponge Iron Manufacturers Association president Anil Nachrani said.
Coal India’s largest consumer NTPC expects a 60-70% impact on tariff. “This will mean about a 70 paise per unit rise in generation cost, which will be passed on to consumers,” a company executive said. The power ministry has asked the coal ministry to move back to the old pricing mechanism.
A coal ministry official said “the company moved to the new pricing system after recommendations by the TL Shankar committee and the Planning Commission’s Integrated Energy Policy”. He said the move was revenue neutral for Coal India. Analysts, however, said that the new pricing would increase the company’s revenue by 15%.
A Coal India official said that even after the revision, coal price would be 77% lower than international prices for power, fertiliser and defence sectors. Coal India has been asked not to implement the new policy for West Bengal power companies till January 16 after a non-profit organisation, Howrah Ganatantrik Nagarik Samity, filed a PIL in the Calcutta High Court accusing the company of making abnormal profits by repeatedly raising prices.