Coal India has decided to alter the pricing mechanism for the coking coal it produces, to take the prices it charges its domestic customers for washed coking coal closer to international levels. Also, it will enter into monthly price contracts with customers as against the current norm of quarterly contracts, officials informed.
Coal India mines and sells coking coal only through its subsidiary Bharat Coking Coal Ltd (BCCL). Under the new norm, to be made effective from April, BCCL would be charging 20% less than the landed cost of imported coal of equivalent gross calorific value, against 30% earlier. BCCL sells nearly all its washed coking coal to SAIL. However, if analysts are to be believed, the increase in prices will not impact the steel major in a big way.
This is because, coking coal prices are currently ruling at $168 a tonne in the global spot market, down by a good 25% over the last 12 months or so. Since SAIL imports close to 80% of its total coking coal requirement of about 14 million tonne (mt), the price increase by Coal India will apply to only around 3 mt. At any rate, Coal India had not touched coking coal prices last February, when it revised washery charges upwards by as much as 50% to Rs 753 a tonne.
Meanwhile, avoiding an across-the-board hike in prices – which had turned into a political hot potato the last time – Coal India is also learnt to be going for selective price reworking and rationalisation for some of its mining subsidiaries.
Earlier this month, Coal India had put forward a proposal before the government – to be considered at the meeting of the Standing Linkage Committee on Power – to charge cost-plus prices, rather than notified prices, for coal to be produced from some of the new mines of subsidiary Western Coalfields which require fresh investments.
Meanwhile Coal India Ltd (CIL) said it has signed fuel supply pacts with three power firms - Maithon Power, Rosa Power Supply and Adhunik Power and Natural Resource - and agreements are yet to be made in case of eight others. So far, the coal miner had entered into agreements with 54 power generation firms - excluding these three. “Of the 11 power generation firms, FSAs have been officially executed with three of the firms -Maithan Power Ltd; Rosa Power Supply Company Ltd and Adhunik Power and Natural Resource Ltd,”CIL said.
“While eight firms have already achieved their respective qualifying milestones, FSAs are yet to be inked with them. However, Memorandum of Understanding (MoU) has been entered into with two of those eight firms awaiting formal signing of the FSAs. They are NCCP, Dadri Stage-II 2nd Unit (NTPC) and Damodar Valley Corporation Mejia TPS Unit 7,” a CIL statement said.
It added that the firms with whom coal companies have not yet entered into FSAs are Dhariwal Infrastructure (P) Ltd; SKS Power Generation Chhattisgarh Ltd; NRI Power & Steel (P) Ltd; Maruti Clean Coal and Power Ltd; Neeraj Power (P) Ltd and UPPCL (Bara TPS).
“Coal companies will diligently examine and adhere to all the provisions and terms of reference and norms of LoA before signing the FSAs,” CIL said. The Coal Ministry has said CIL is taking all precautions to verify the required milestones and conditions before signing FSAs with companies. It had earlier questioned CIL for considering FSAs with 11 power developers, worth 5,935 MW capacity, saying they were yet to achieve critical milestones related to their projects.
However, the Ministry stated that so far, 54 FSAs have been signed, while in 11 mentioned cases it was decided to verify the present status.... It was observed that milestones related to acquisition of land, financial closure... had been achieved by the applicants in terms of provision of letter of assurance issued to them.
“After this confirmation, out of these 11 cases, FSAs have been executed only in three cases while in two cases MoUs have been signed for coal supply as per advise of Ministry of Power...the other six cases are under consideration,” it said. The list of 11 firms included projects of some big developers like NTPC, Tata Power and Reliance Power.
Coal India mines and sells coking coal only through its subsidiary Bharat Coking Coal Ltd (BCCL). Under the new norm, to be made effective from April, BCCL would be charging 20% less than the landed cost of imported coal of equivalent gross calorific value, against 30% earlier. BCCL sells nearly all its washed coking coal to SAIL. However, if analysts are to be believed, the increase in prices will not impact the steel major in a big way.
This is because, coking coal prices are currently ruling at $168 a tonne in the global spot market, down by a good 25% over the last 12 months or so. Since SAIL imports close to 80% of its total coking coal requirement of about 14 million tonne (mt), the price increase by Coal India will apply to only around 3 mt. At any rate, Coal India had not touched coking coal prices last February, when it revised washery charges upwards by as much as 50% to Rs 753 a tonne.
Meanwhile, avoiding an across-the-board hike in prices – which had turned into a political hot potato the last time – Coal India is also learnt to be going for selective price reworking and rationalisation for some of its mining subsidiaries.
Earlier this month, Coal India had put forward a proposal before the government – to be considered at the meeting of the Standing Linkage Committee on Power – to charge cost-plus prices, rather than notified prices, for coal to be produced from some of the new mines of subsidiary Western Coalfields which require fresh investments.
Meanwhile Coal India Ltd (CIL) said it has signed fuel supply pacts with three power firms - Maithon Power, Rosa Power Supply and Adhunik Power and Natural Resource - and agreements are yet to be made in case of eight others. So far, the coal miner had entered into agreements with 54 power generation firms - excluding these three. “Of the 11 power generation firms, FSAs have been officially executed with three of the firms -Maithan Power Ltd; Rosa Power Supply Company Ltd and Adhunik Power and Natural Resource Ltd,”CIL said.
“While eight firms have already achieved their respective qualifying milestones, FSAs are yet to be inked with them. However, Memorandum of Understanding (MoU) has been entered into with two of those eight firms awaiting formal signing of the FSAs. They are NCCP, Dadri Stage-II 2nd Unit (NTPC) and Damodar Valley Corporation Mejia TPS Unit 7,” a CIL statement said.
It added that the firms with whom coal companies have not yet entered into FSAs are Dhariwal Infrastructure (P) Ltd; SKS Power Generation Chhattisgarh Ltd; NRI Power & Steel (P) Ltd; Maruti Clean Coal and Power Ltd; Neeraj Power (P) Ltd and UPPCL (Bara TPS).
“Coal companies will diligently examine and adhere to all the provisions and terms of reference and norms of LoA before signing the FSAs,” CIL said. The Coal Ministry has said CIL is taking all precautions to verify the required milestones and conditions before signing FSAs with companies. It had earlier questioned CIL for considering FSAs with 11 power developers, worth 5,935 MW capacity, saying they were yet to achieve critical milestones related to their projects.
However, the Ministry stated that so far, 54 FSAs have been signed, while in 11 mentioned cases it was decided to verify the present status.... It was observed that milestones related to acquisition of land, financial closure... had been achieved by the applicants in terms of provision of letter of assurance issued to them.
“After this confirmation, out of these 11 cases, FSAs have been executed only in three cases while in two cases MoUs have been signed for coal supply as per advise of Ministry of Power...the other six cases are under consideration,” it said. The list of 11 firms included projects of some big developers like NTPC, Tata Power and Reliance Power.
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