Relief means little for better varieties

Calcutta: Good quality coal will continue to cost more even after Coal India’s price rollback today.

Under the directive of the Planning Commission and the coal ministry, Coal India changed the pricing mechanism to the internationally accepted gross calorific value method from the useful heat value method, a system that existed only in India since 1979.

The revised coal prices based on GCV may not fetch additional revenue for Coal India, but will increase the coal cost for some consumers, including ailing power producer West Bengal Power Development Corporation Limited (WBPDCL).

This is because the seven grades of coal under the UHV system have been reclassified into 17 bands under GCV with a narrower range of 300 kilocalories against 600 kilocalories earlier.

Coal having UHV of 6,200 kcal per kg or more was classified as grade A and priced at Rs 4,100 per tonne earlier. A useful heat value of 6,200 kcal is equivalent to 6,454 kcal in terms of GCV.

According to the January 1 notification, coal having a gross calorific value of 6,454 kcal will cost Rs 4,460 per tonne. After today’s revision, the same coal will cost Rs 4,420 per tonne, which is still higher than the Rs 4,100 per tonne under the UHV system.

Similarly, coal having UHV between 4,940 and 5,600 kcal/kg under grade C was priced between Rs 1,410 and Rs 1,860 per tonne depending on the coalfield origin.

Under GCV, the grade C equivalent is 5,597 kcal per kg and 6,049 kcal per kg. In the new pricing mechanism, this kilocalorie bandwidth has been subdivided into two classes — 5,500-5,800 kcal and 5,800-6,100 kcal. The coal with GCV between 5,800 kcal per kg and 6,100 kcal per kg will cost Rs 2,800 per tonne (against Rs 1,860 per tonne) and coal with GCV between 5500 kcal per kg and 5800 kcal per kg will cost Rs 1,450 per tonne after today’s revision.

A power producer consuming C-grade coal with higher UHV in the band will now have to pay more than before.

“We generally use grade B and grade C coal — grade B from Eastern Coalfields Ltd and grade C from Mahanadi Coalfields Ltd. However, in percentage terms grade C is used more,” said a senior official of WBPDCL.

“I have not yet gone through the revised coal prices, so I cannot tell you the exact impact on us,” he said.

Lower grades such as D, E and F were subdivided into three classes each under the GCV pricing system. Thus, power producers who have been using higher UHV coal in these respective coal grades will see their prices going up.

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