Will the Recent CIL’s Coal Price Hike Trigger More Coal Imports into India?

Fuel cost of power producers in India has apparently gone up after the recent price hike of 6.29% by Coal India Limited.

According to a recent estimate by India Ratings, a well-known rating agency, prices of the mostly consumed G11 to G13 grades have gone up by INR 100 to INR 150 per tonne, which will result in power tariffs going up by around 8 paisa per unit.

The recent rise in fuel cost is in addition to the increase of INR 300 per tonne due to the clean energy cess, applicable since 2015, and the recent increase in royalty from 14% to 18%.

Imports are thus like to increase in the country as power producers will explore cheaper import options to lower their rising fuel bills. The rating agency has calculated that prices of imported coal is cheaper by around 5%, at the coastal regions in the country, in comparison with the prices of domestic coal.