CIL changes coal pricing policy, new pricing policy (2018)
Kolkata, Jan 11 (IBNS): Coal India Limited (CIL) is rationalising the prices of coal to make the system more transparent, streamlined and consumer friendly, according to the state-owned coal company.
CIL has changed its pricing policy for non-coking coal in alignment with global prices in a decision taken on Tuesday.
The new pricing system is based on ‘Per unit calorific value of coal (Rs/Kcal), which is a global system of coal pricing instead of the Band based pricing system.
Transparency, heavy discount and financial benefits to customers, price rationalisation are some of the key benefits of the New Pricing Policy (2018).
The new pricing policy is more linear in comparison to the older pricing mechanism. This provides consumers with a more accurate and transparent method for arriving at coal prices. Additionally, calculating the basic price of non-coking coal of any mine of CIL based on its GCV is simpler.
WPI, CPI as well as global prices of coal have increased significantly over the last couple of months; however the rationalisation of coal prices has helped keep prices low in India. In the new policy, CIL has offered heavy discount to its long term consumers. This discount varies between 44%-66% depending on GCV of coal.
Due to the earlier Band Pricing System, consumers had to pay Rs. 3210/ton for all G2 coal lying within the GCV range of 6701-7000. However, in the new Pricing Policy consumers will have to pay Rs. 144/ton less for coal having GCV 6701 Kcal compared to coal with GCV 7000 Kcal. The cheaper price is due to the linear pricing mechanism of the new policy.
Under Pricing policy (2018), the managers will focus on quality since marginal improvement even by 1 Kcal will fetch additional revenue to the individual mine and have an impact on the bottom-line of the unit.
The new policy sees reduction in the prices of 7 grades. In some cases, prices have been reduced even to the extent of Rs 162/ton.
As the implementation of new pricing policy (2018) will need ground preparation, it has been decided that the pricing based on the new formulae will come into effect by 1st April 2018 or earlier.
The strong growth in the demand for coal backed by unmatched increase in despatch by CIL, have reduced import dependence. According to the company, this will lead to an upturn in sales volume which will help in offsetting the large outgo of Rs 6,350 Crore caused by the hike in workmen salary as well as offsetting the outgo of about Rs 950 Cror on account of salary hike of Executives.
Therefore, CIL's financials will continue to be robust, the company said.
Image: Creative Commons/Wikipedia
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