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Wednesday, 09 December 09
COAL INDIA YET TO IMPLEMENT IMPORT LINKED PRICES


Coal India Ltd is adopting a conservative approach in pricing despite being allowed to charge import-linked price for the country's minuscule reserve of 12-13 million tonnes of A- and B-grade high quality coal. The company was allowed to charge import-linked price for superior grade coal in October.

Eastern Coalfields Ltd, which has the country's largest reserve of 11 million tonnes of superior coal having highest energy value and low sulphur content, recently entered into MoUs with four West Bengal-based power producers to sell the underground production of 5 million tonnes of A- and B- grade coal at an import-linked price of Rs 3,500-3,700 (US$ 74.82 - 79.10)  a tonne. The four power producers are CESC Ltd, West Bengal Power Development Corporation Ltd, Durgapur Projects Ltd and Damodar Valley Corporation.

The landed price to the producers will include 25 per cent cess and Rs 6 (US$ 0.12 ) a tonne of royalty collected by the West Bengal Government plus freight. Till the coal price hike in October, the notified price of A- and B- grade coal at pit head was Rs 1,700-1,800 (US$ 36.34 - 38.48) a tonne.

According to an industry source, the price of similar grade Australian coal (of over 6,000 Kcal/kg of gross calorific value) is approximately $65 a tonne on FOB basis. After inclusion of $25 a tonne of ocean freight cost, the landed price of similar imported coal is Rs 4,500 (US$ 96.17) a tonne at today's exchange rate.

“We are yet to devise a finer mechanism for charging import-linked price and have priced our underground production of superior coal at 15-16 per cent lower than the landed cost of imported coal.

However, we are charging the notified price (Rs 2,200-2,300 (US$ 47 - 49.15) a tonne) open cast production of A- and B-grade coal.

The weighted average of price of the coal on million Kcal basis works out to be approximately 50 per cent cheaper than the imported coal,” a CIL official said.

According to him, following introduction of import-linked price ECL's underground operations may break-even beginning this fiscal.

Apart from ECL, South Eastern Coalfields Ltd has small quantities of A- and B-grade coal reserves. However the company is yet to charge import-linked prices. (1 USD = 46.7942 INR)
Source: Business Line



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