Coal India Ltd will introduce the
internationally-accepted gross calorific value (GCV)-based pricing mechanism
from January 1, according to sources. The switchover was advocated by the Union
Coal Ministry in October this year.
The new system will replace the
existing seven useful heat value (UHV)-based grades by a wider range of
offerings each classified by a narrow bandwidth of GCV.
The CIL top management previously
announced that the new product classification will be revenue neutral, as coal
offered under each existing grades will be reclassified in a manner so that the
average price remains the same. Market sources, however, suggest that the new system
may have a thin “revenue impact” to the coal major.
Since existing grades are
differentiated by a wide bandwidth of 600-1,100 kilo calories a kg, consumers including power sector linked to better mines under each such grade may feel
the pinch. However, the cost of fuel to power sector as a whole should not be
impacted substantially.
Sources suggest that a firm
proposal for switchover to GCV-based pricing system with effect from January 1
may be placed before the board of directors of the company in end of next week.
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