Singareni hikes coal prices by 5-15%

Price revision to help company gain around Rs 220 crore

After a three-year long gap, state-owned Singareni Collieries Company Limited (SCCL) has hiked the coal prices between five and 15 per cent, across various grades of coal.

The average price increase is around 8.87 per cent. The price increase came into effect from yesterday. In rupee terms, the average price increase has been calculated at Rs 72.50 per tonne, over the existing average price of Rs 817.31 per tonne.

The additional gain to the company due to the price revision is expected to be around Rs 220 crore. "Coal India (CIL) has increased its selling prices by about 21 per cent. Considering the steep escalation in input costs, the average increase of coal prices by SCCL is very modest," SCCL authorities told Business Standard.

Interestingly after the revision, prices of higher grades of coal are double that of the lower grades of coal. As per the revised rates, the price of B, C and D grades of coal will go up by 15 per cent whereas the basic price of E, F and G grades of coal will increase by only 5 per cent.

The price revision by the company has been sensitive enough not to impact the generation costs of the thermal stations, which predominantly use the lower grades of coal.

"In the case of APGenco, the five per cent increase in prices of lower grades of coal would work out to a marginal increase of two paise per unit. This increase can also be neutralised by an increase in the supplies of lower grade coal instead of the current C grade coal to the power utility," T R K Rao, executive director of SCCL told Business Standard.

Justifying the board's decision, Rao explained that the steep increase in the cost of production had forced the company to go for a modest increase of its coal-selling price.

During 2003-04, the cost of production and the average sale price of coal under Coal India Limited stood at Rs 572 and Rs 950.80 respectively as compared to Rs 878.8 and Rs 941.94 respectively in the case of Singareni Collieries.

The high production cost of SCCL is due to the percentage of underground mining that it does, which causes a daily loss of Rs 1.79 crore to the company, according to Rao.

SCCL has produced about 33.85 million tonnes of coal during 2003-04. Around 70 per cent of the total production is being consumed within the state. Supplies to APGenco and NTPC stood at 8.3 million tonnes and 10 million tonnes respectively, while the cement industry consumes another five million tonnes.

International coal prices in the past three years have gone up by about 200 per cent from $35 to $75 per tonne and the country is now experiencing a virtual 'coal famine'. In this backdrop, SCCL's decision to increase prices is said to be having the blessings of the Union coal ministry as well.