Coal India may hike coal prices by 10%
Sources privy to the development said mining major Coal India Ltd may hike dry fuel prices by at least 10-11 per cent to offset the impact of increased cost and impending wage revision. The Kolkata-headquartered company had last hiked coal prices in 2018. Its current average regulated price realization is Rs 1,394 per tonne.
“There has been no increase in the price of fuel supply agreement coal for the last few years. The cost has gone up on all fronts and is because of wage revision. Minimum 10-11 per cent growth is required to avoid bottomline erosion. Coal India has discussed the matter informally with the board members and most of them have acknowledged the need for hike in coal prices. The miner is awaiting the government’s nod after which it will take a final call.
Chairman and Managing Director Pramod Agarwal recently said that the cost of the miner has gone up, and there is no reason why it should not increase the prices of dry fuel.
Within FSA coal, the power sector is priced cheaper than non-power industrial consumers such as steel and cement.
“On an average, non-electric coal is 15-20 per cent higher than electricity consumers,” the sources said.
He said the wage revision, which is due from July this year, is likely to cost miners an additional Rs 10,000 crore. The current annual salary cost is around USD 5 billion.
Coal India had signed a wage agreement in 2017, in which trade unions had proposed a 20 per cent hike in wages for five years. A rise in coal prices usually has an impact on the economy, starting with an increase in the cost of electricity. Sources said a 10 per cent hike in prices could lead to a hike in electricity prices by 20-30 paise per unit.
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