Power prices may go up by upward of 7 paise a unit across the country, industry officials said.
Power prices are set to go up as the impact of average price hike by Coal India for the sector would be about 7.5-8%, multiple sources said.
Power prices may go up by upward of 7 paise a unit across the country, industry officials said.
While the average price hike announced during the weekend by Coal India is 6.2%, its effect would be much higher because of the way the hike has been distributed across its various grades.
Coal India currently sells 17 grades of non-coking coal, based on gross calorific value ranging between 2,200 and over 7,000 kilo calorie per kg.
Prices of several high grades of coal have been cut by Coal India in response to soft international prices while prices of several lower grades of coal, particularly used by the power plants have been raised substantially high, so that the average comes to about 6.2%, sources said.
"There would be a largely upward push to our coal costs as most of the new-generation power plants nowadays operate with poorer grade coal," an official of CESC Ltd told dna.
"Depending upon the quality of coal power plants use, the upward impact on power costs could be anything between 7-15 paise per unit," an official of the power utility said.
"The impact is more on power sector as it may increase tariff by around 7 paise per unit," Subhasri Choudhuri, secretary general, Coal Consumers' Association of India, said.
"Notified prices for higher grades, from G2-G5, were cut substantially by about Rs 500-1,000 a tonne. Prices of lower grades (G5-G13) were increased by Rs 100-300. Average price hike for the power sector is 7.5-8%," a research report by Motilal Oswal said on Monday.
A study of the grades of coal being offered by Coal India for the power sector under its special forward e-auction shows that the grades fall in the range G9-G13.
An analysis by Motilal Oswal shows that prices for the G2 grade have been cut by Rs 1,420 a tonne to Rs 4,897 a tonne, including charges and cess.
Prices have been cut by Rs 680, Rs 490 and Rs 50 a tonne from Grade 3 up to grade G5, respectively. From that grade below, prices have been raised at all levels, in a range of Rs 70 a tonne for G12 to Rs 300 for G6.
The revisions in lower grade coal price have been up to 19% in some cases.
"We estimate blended prices for power sector to have increased by 7.5-8% while those for non-power sector to have marginally declined," Motilal Oswal said, adding that for non-regulated sectors like cement and steel, the impact is negated by the cut in notified price premium from 35% to 20%
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