Restructuring of Coal prices to push power generation cost by 40p/unit 

The restructuring of coal prices from January 1 will hit the
power utilities hard and it is feared that it would push up electricity input
costs.

Thermal power plants that largely use a mix of different
grades of coal may face the price pinch badly. New coal prices, i.e. expected
to be dearer by 12-15 %, will push up power generation cost by at least 40
paisa per unit.

The restructuring followed a shift from “useful heat
value” (UHV) in determining price to (gross calorific value) GCV-based
price mechanism from January 1.

While GCV-that measures the amount of heat liberated by
carbon and hydrogen in the coal when it is heated – is an internationally
accepted pricing mechanism, due to the high ash content in Indian coal,
the UHV mechanism was followed. Typically in Indian coal, GCV is 25% higher
than UHV.

Those using coal of B, G and F grades will not be affected
as new prices will be either same or lower, those using other coal grades will
be majorly affected.

Power utilities use a mix of coal grades – particularly of
A, D and E grades – where prices are likely to go up the most. “Even if we
want to use more coal of higher calorific value, CIL cannot supply it. So we
will be using the same coal but paying more,” said a utility official.