Huge disparity in GMDC lignite prices

The pricing policy of the Gujarat Mineral Development Corporation Ltd (GMDC), a state government undertaking and a prominent producer of lignite in the state, has baffled the industry as a whole.

"GMDC is involved in mining of lignite in Panandhro in Kutch and Rajpardi in Bharuch district. The lignite is mined and distributed by GMDC, but there is a big difference in the prices of lignite," a Surat-based lignite dealer told Business Standard, requesting anonymity.

"The lignite mined at Panandhro is priced at around Rs 690 per metric tonne, including the royalty and the sales tax. The price of lignite mined at Rajpardi comes at around Rs 1,140 per metric tonne, i.e. a difference of more than 60 per cent," he said.

"The quality of lignite produced at both the places is the same. The calorific value is the same. The mining and supply at both the places is under the control of GMDC. So this huge disparity in the prices does not make any sense," he said.

The Rajpardi lignite is priced much higher than the Panandhro lignite. However, the GMDC officials reason that the price of the former is lower by almost Rs 600 per metric tonne compared with the price of the latter, if one takes into consideration the freight charges.

"While the freight charges for bringing lignite from Panandhro to Surat is around Rs 1,450 per metric tonne, it is around Rs 400 for bringing lignite from Rajpardi. The officials say that since the Rajpardi lignite is available in Surat at a lesser rate than the Panandhro lignite, there is no reason to reduce its rate," the dealer said.

"The state government should realise this disparity in the prices and bring down the prices of lignite mined at Rajpardi. Even if the prices cannot be brought down to the level of Panandhro lignite, steps should be taken to reduce the price of Rajpardi lignite reasonably," he said.

Around 400 trucks, carrying 4,000 metric tonne of lignite, arrive in Surat each day from Rajpardi, while around 150-175 trucks arrive in the city with lignite from Panandhro. The lignite is mainly used as a fuel in the processing units.

The processors have, recently written to the state government, seeking reduction in the sales tax on lignite from the current 20 per cent to four per cent.