The new pricing method is bound to lead to a cost increase of around 25 per cent in the price of coal and in turn affect power generation cost and power tariffs.
Coal India had on Friday (December 30) decided to switch to the internationally accepted gross calorific value (GCV) based pricing mechanism beginning 2012.
The new mechanism will replace the existing seven grades, each divided by a broad bandwidth of 600-1,100 kilo calorie (kcal) useful heat value (UHV), by large number of products of 300 kcal bandwidth each beginning 2,200 kcal to over 7,000 kcal.
“There was a 40 per cent hike in prices (of coal) last year and now there is a proposal for another 25 per cent hike. They are also charging us for the value of ash content in the coal. How will it be possible to supply power at affordable rates in a scenario like this” said market experts.
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