Singareni mulls coal price hike

State-owned Singareni Collieries Company Limited (SCCL) is considering the option of hiking coal price to offset the recent increase in production costs.

Disclosing this here today, R H Khwaja, SCCL chairman and managing director, said the company's board at its meeting on Wednesday would discuss and explore the option of increasing the coal price without impacting the power sector.

According to him, the difference between the sale price and the production cost has come down to just Rs 73 per tonne.

While the average sale price of coal is Rs 1,018, the production cost is Rs 945 per tonne.

On the other hand, the average difference between the production cost and sale price in the coalfields run by Coal India Limited (CIL) is about Rs 196 per tonne.

"With the pressure on adding more capacities to meet the requirement of a range of consumers, the SCCL needs to have a sound financial strength based on returns to make investments in new mines. This is a challenge we are now facing," Khwaja said, adding that based on the variables the Singareni board had to come out with a formula that could take care of the interests of both the company and the consumers.

Asserting that the price hike was imminent, he said, "Improving internal efficiency or cutting down on costs alone will not suffice to meet the challenge as the company does not receive any financial assistance from governments."

"The production cost in CIL is comparatively low as underground coal mining forms a small part of its operations unlike the SCCL where the expensive underground coal mining accounts for 35 per cent of the total coal production," he said.