CEE Jan-Mar 2012

annually, according to sources. The company previously said that the switchover to the new system should be "revenue-neu– tral". Meanwhile, the Union Government has reportedly notified the new GCV-based cement and royalty formula to be applicable to States. While d ails of the same are not available, consumer groups indicate that this may further impact the, landed cost of coal to all consumers. Consumers Hit While the price-rationalisa– tion may have minimal impact on the regulated sectors,' largely power, non-regulated sectors such as cement, iron and steel, aluminium, paper and many others should feel the pinch. Official confirmation on the same is not available. Though officially notified, the new prices - scheduled to come into effect from mid night on Saturday - have yet to be released at the CIL Web site. Major consumer associations were, however, given access to new price formula on Saturday evening. Initial estimates suggest that prices of C and D grade coal will experience a sharper rise under the new formula expectedly boosting revenues of Central and Northern Coalfields. On a rupee per calorie basis, Eastern Coalfields which suffers from one of the lowest man-to-coal ratios is offered a 6 per cent markup over other miners to en– sure its revenues are not im– pacted. The prices of low-ash A and B grade coal which were already linked to international prices will be least affected. The' E and F grades, mostly consumed by power stations, will experience some upward movement. Dual Pricing According to sources, the new pricing formula continued with the practice of dual pricing for regulated and non regulated sectors so as to ensure that the power sector is least affected. While CIL sources expect that the dual pricing, coupled with minimum movement in the E and F sectors, to have minimum impact on cost of coal 'for power sector, there are concerns that the old-generation power stations linked to good quality coal may witness a rise in fuel cost. Courtesy: The Hindu Business Line, January 1, 2012, Kolkata COAL PRICE SURGE: POWER MINISTRY SEEKS SCRAPPING OF IMPORT DUTY The Power Ministry is pushing for abolition of Customs duty on imported coal. The Ministry, senior officials said, is trying to garner the support of the Planning Commission on the issue, which is expected to be countered by the Finance Ministry in light of the revenue implications. The Power Minister, Mr. Sushilkumar Shinde, hinted at the measures being considered following the increase in imported coal prices. "The Govt. will initiate some corrective measures to reduce the burden on the consumers resulting from the increase in imported coal", he said. Power project developers setting up units that are to run on imported coal, including two upcoming Ultra Mega Power Projects (UMPP), have raised concerns about the hike in prices of imported coal from countries such as Indonesia and Australia. Currently, a five per cent basic Customs duty is levied on imported coal. Key coal exporting countries such as Indonesia and Australia have changed their coal pncmg methodology in recent months, leading to international coal prices skyrocketing. Courtesy: Total Energy, Nov. - Oec.2011, P25. ELECTRICITY TO COST 60 PAISE/UNIT MORE ON NEW COAL PRICE FORMULA Your electricity bill could go up by 50-60 paise a unit as early as February, triggered by the recent increase in coal prices. Currently, the average cost of power is Rs 3-4 a unit. The average realisation for NT PC in the September quarter was Rs 3.3 a unit, up from Rs 2.66 last year. Effective January 1, Coal India switched from the useful heat value (URV) based coal grading system to gross calorific value (GCV) system for pricing coal. This move has not gone down well with power producers, as this will push up the fuel cost. The producers have been raising the issue with the fuel suppliers. Though suppliers claim that migration from the URV to GCV based system will be revenue neutral, those track– ing the sector said that in reality there will be a big increase in pricing without any value addition. Power generating compa– nies typically use grade E and F coal. The basic price of grade E coal will be Rs 8801 ,781 a tonne against Rs 7301 ,090 under the old pricing syster.-1 (data based on 'Final offer document' of Coal India). For grade F coal, the price will be Rs 630-933 against Rs 570- 870 earlier. 38