Power producers in the state will have to pay Rs750 crore per
annum more due to Coal India's new coal pricing mechanism.
The change in pricing mechanism of coal by the Centre-owned Coal India Limited (CIL) is expected to hit hard power producers in the state. It is estimated that the power producers would have to pay Rs750 crore more for coal following the revised pricing mechanism.
According to officials, with coal prices going up, power producers will have no option but to pass on the hike to consumers.
Coal India, the largest coal producing company in the world, has switched to the internationally-accepted Gross Calorific Value (GCV) based pricing mechanism from the earlier Useful Heat Value (UHV) based system from January 1. As against seven categories earlier, the company has categorised coal in 17 price bands under the new pricing system.
According to the officials, power plants in Gujarat mostly consume D, E and F grade coal. Depending upon their calorific value, coal of these grades has become costlier by 11% to 93%, which would lead to additional financial burden on the power producers, including state government utilities.
"There is going to be huge burden on power utilities in the state on account of the revised coal pricing mechanism," state energy minister Saurabh Patel, said.
The minister said power producers in Gujarat were already paying much more for coal due to allocation from coal mines in far-off Chhattisgarh, instead of mines in neighbouring Maharashtra.
"There are times when we pay more as freight charges than the coal prices, which leads to burden on consumers. This can be brought down by allocating coal from nearby mines," Patel said.
"The revised coal pricing mechanism would lead to financial burden of Rs750 crore per annum on power producers in the state," said a senior government official.
The total installed power generation capacity in the state is more than 15,500 MW, of which close to 7,000 MW is coal-based, which is among the highest in the country. The state consumes around 1.50 lakh million metric tonne of coal per annum.
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