Coal price revision to hike power cost

KOLKATA: Power utilities in the state anticipate the cost of electricity generation to shoot up at least by 20 paisa per unit, thanks to the coal price revision announced by Coal India Ltd (CIL) on Wednesday. State utilities said the impact would be as much as 20 to 40 paisa per unit. Even as the intensity of the blow is expected to be half of what was apprehended when CIL made the first price revision on January 1, utilities have to wait till when the Calcutta High Court hears out petition by the state government and its utilities against CIL prices.

West Bengal State Electricity Distribution Co Ltd (WBSEDCL) is already under financial constraint and has not been able to apply for a tariff revision even after revision of coal prices before the recent one. CESC consumers, however, will feel the pinch as the utility goes in for an interim hike sometime after the pending tariff revision.

Of 17 categories of coal computed under the gross calorific value (GCV) against the earlier seven bands when coal was sold on the basis of useful heat value (UHV), price has been hiked between Rs 30/tonne and Rs 1,630/tonne. But with power utilities primarily using coal of calorific value 4,000-6,000 kcal/kg, the additional payout will be between Rs 70/tonne and Rs 1,750/tonne. But if power utilities manage to avoid the fifth grade of coal with calorific value 5,800-6,100 kcal/kg, the price hike will be contained between Rs 70/tonne and Rs 570/tonne.

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 that took into account the heat trapped in ash. Typically in Indian coal, GCV is 25% higher than UHV.

“Among the category of coal we use, we expect the average price hike of Rs 400/tonne. That translates to around 20 paise hike in per unit generation cost,” a CESC official said. The private utility that supplies power to Kolkata and adjoining areas purchases 35 lakh tonne of coal from CIL, is also worried about 3-4% wastage as they will have to shell out anything between Rs 360/tonne and Rs 500/tonne for extremely low-grade coal (calorific value 2,200-3,200 kcal/kg) that were considered stone till December 31, 2011.

WBSEDCL, however, fears a bigger hit as it buys bulk of its 20 lakh tonne coal requirement from CIL. “We purchase around 16 lakh tonne coal from the company. Around 80% of the purchase is in the bandwidth of 4,000-4,500 kcal/kg and 20% from 5,000-6,000 kcal/kg,” an official said.

What power utilities are miffed over is that CIL will have the ultimate say in the quality of coal supply. “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,” an official explained.

The worst affected will be power units in the east as CIL will levy 6% extra on coal from Eastern Coalfields Ltd (ECL) as it is a sick subsidiary and listed with the Board for Industrial & Financial Restructuring (BIFR). ECL supplies coal to both CESC and WBPDCL. Power from Bharat Coking Coal Ltd and Mahanadi Coalfields Ltd also supplies coal to power plants in the state.

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