Come Apr’18, the market players in the Indian coal industry will witness a change in the coal pricing system.
With effect from 1 Apr’18, the state run Coal India Limited (CIL) will change its pricing policy from INR/MT to Paise/Energy Unit. This will mean that the price of every MT of coal will be determined on the basis of the intrinsic energy content; unlike in the prevailing system in which price is the same for a range of energy content, and at the same time, the range is divided into grades of specific energy. And under the new system, the number of coal grades will be reduced to 10 from the existing 17. The broad categories of grades will be three: High Energy, Medium Energy and Low Energy.
The rationale behind the new system of pricing—based on global practices– to provide a more accurate and transparent system method of coal pricing. As the new system will involve customers paying different prices for different energy content, mine managers are expected to be incentivized to maintain quality.
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