Coal India is to cut extra premium charges on high grade domestic (G2-G5) coal as intended to compete with imported grades.
CIL, the largest producer of coal in the country, has planned to remove premium charges on extra supply of coal without any reduction on notified price. The company’s move will help to increase sales and reduce stock further. Also, it will help to compete with imported grades such as Indonesian, South African, and Australian etc.
The strategical initiative has been taken by the company amid rapid fall of global prices and poor response for domestic grade coal, which lead to rise in coal stock.
However, the CIL will no longer charge premium for extra coal supply, also discounted upto 40% for both power and non-power producers. The price reduction will be applicable for the overall fiscal, FY17. This move will help to increase sales and clear large stock piles, which have been increasing since the mid of FY16 owing to high productivity in the fiscal.
As per the released, CIL has removed performance incentive of all higher grade coal supplied, lied between the category of G2-G5 (6700-6100 GCV), which contributes about 8% (43 MnT) of total yearly production of CIL.
CIL’s signed FSA and premium charges on extra coal supply
Earlier, CIL was charging extra premium from buyers for supplying excess of 90% material committed in the FSA.
- According to FSA (Fuel Supply Agreements), the company was to charge a 10% premium over its notified price for more than 90% of contracted quantity of coal supplied in a year.
- Between 95-100% coal supply, the premium was to be 20%.
- If supplied over 100% of the contracted volume, buyers was to be charged 40% over the base price.
“We have decided to eliminate the premium charge for additional coal supply over 90% of FSA volume. Hence, the consumers will get a 10%, 20% and 40% of discount for supply between 90-95%, 95-100% and above 100% of the contracted volume respectively”, said an official of CIL.
Moreover, now consumer can purchase extra coal beyond 90% of annual FSA without paying any extra charges.
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