CORPORATE PRESS RELEASES (INDIA) news desk
http://www.thehindu.com/business/Industry/article2828701.ece
Responding to concerns of the public and private sector power producers and its impact on the consumers, the Coal Ministry on Tuesday admitted that Coal India Limited (CIL) had made some mistakes in adopting a new system of coal pricing and set January 30 deadline for downward revision of coal prices.
Coal Minister Sriprakash Jaiswal told journalists in New Delhi that a new pricing mechanism that would addresses the concerns of all the stakeholders would be put in place by the end of this month. “By January 30, the result would be in front of you. The coal price would be revised downward. Coal India Limited (CIL) has made some mistake in the system adopted for pricing of coal under the new mechanism,’’ he added. The development comes in the wake of a Coal Ministry review meeting on the pricing mechanism held last week, where it was decided that a correction of coal prices will be effected.
The new pricing mechanism based on Gross Calorific Value (GCV), which came into effect on January 1, had led to an increase in rates of the fossil fuel, though the Coal Ministry had indicated the new formula would be revenue-neutral. It had all the power producers, public and private, expressing serious concern that this would lead to a nearly 40 per cent hike in generation cost and in turn tariff hike for the consumers. The Indian Captive Power Producers Association (ICPPA) and NTPC had expressed serious reservations on the new pricing policy and urged the Coal Ministry to review it in the interest of the future generation capacity and end consumers.
Last week, Mr. Jaiswal said CIL’s new pricing mechanism will be reviewed on January 20 and a solution would be worked out so that the increase in rates was not more than required. Clarifying that the GCV-based pricing for coal will not annulled, he said the variation in prices would be reviewed.
Till December 31, 2011, CIL used to follow a pricing mechanism based on the Useful Heat Value (UHV) of coal, which deducted ash and moisture content from the standard formula. However, from January 1, it shifted to a new pricing mechanism based on the GCV of coal. Under this system, coal prices have been linked to the actual calorific value or quality of coal.
However, the new GCV mechanism has been opposed by consumers across sectors, including power, cement, aluminium and steel, as they feel that prices have risen substantially and this will necessitate in a price increase in their own respective commodities.
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