Captive power producers have opposed Coal India's (CIL) move
to shift to a new pricing mechanism for thermal coal with effect from January 1
as they feel it has increased prices of certain grades by up to 179%.
The new mechanism is based on Gross Calorific Value (GCV),
under which prices are linked to the actual calorific value or quality of coal.
The earlier mechanism was based on the Useful Heat Value (UHV) grading system,
which deducted ash and moisture content from the standard formula.
The switchover to GCV has lead to a steep increase in prices
of coal, specifically in 'C', 'D' and 'E' grades of coal, by more than 100%,
though it is claimed to be price neutral/marginal hike by CIL and Ministry of
Coal,” Indian Captive Power Producers Association (ICPPA) said in its
representation to the government.
Demanding the withdrawal of the new mechanism, the ICPPA
said, “The switchover would result in an increase of power cost by a
minimum of Re 1 per KW/hour, which will have to be suffered by the common
man.”
According to the ICPPA's calculations, the price of 'C'
grade coal has risen between 140% and 179% due to the new mechanism as this
grade of coal has been divided into two categories.
Similarly, the price of 'E' grade coal has gone up by 132%,
while 'F' grade coal prices have risen between 35% and 95%, ICPPA calculations
showed.
'E' and 'F' grade coal account for over 50% of Coal India's
total production and are used mostly by power producers.
The ICPPA further said Coal India has
“discriminated” against and segregated captive power producers (CPPs)
from independent power producers (IPPs) and public sector companies by fixing a
different price for CPPs.
“The discriminatory prices for CPPs as per the latest
pricing circular of December 31, 2011, are as high as up to 60% over the
pricing declared for IPPs and public utilities,” said the reports.
Source: Business Standard
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