Coal news and updates

Imported coal cheaper than CIL produce

Imported coal with high energy content is turning out to be cheaper at a large number of thermal plants than similar coal bought from Coal India since international prices have dipped almost 55 per cent over the past six years while the state-run monopoly miner's prices have only increased, along with freight and other levies.

"Imported coal with very high energy content from Indonesia is arriving at NTPC's Simhadri Plant at a total cost of Rs 6,500 per tonne, including freight, duties and logistics costs, while that at Farakka is around Rs 5,500 per tonne and at Kahalgaon it is Rs 6,000 per tonne," a senior official said, adding, "In contrast, Coal India's coal from Eastern Coalfields, when supplied to these plants, costs Rs 7,000-8,000 per tonne."

The official, who did not wish to be identified, said the imported coal is turning out to be cheaper, especially in West Bengal, also because of the high levies imposed by the state governments.

While cess  in West Bengal is 25 per cent on every tonne of coal sold, another 25 per cent is levied as royalty, the official said, adding that the total levies on coal amount to about 60 per cent. "Eastern Coalfields also levies an additional Rs 390 per tonne. All these added together have kept the prices on the higher side compared to international prices," he said. "Grade slippages, that is, supplying a lower quality coal than promised, also increased the price difference to a large extent."
Power industry executives told ET that shipping charges have also gone down to $50 per tonne, from $110 per tonne in 2009, making imports more attractive.

"In contrast, domestic prices have risen, royalties have increased, so has railways freight and different levies and surcharges," said a senior executive.

With imported prices falling further, coal produced by Eastern Coalfields that is primarily of high energy content, and certain grades of coal produced by South Eastern Coalfields, are turning out to be costlier even at the power plants' doorsteps. This is expected to exert pressure on Coal India to rationalise its prices, especially since India's largest power generator, NTPC, is also considering stepping up imports of high quality coal.

source: http://economictimes.indiatimes.com