Govt considering import parity price for domestic coal

New Delhi, June 1 (PTI) The Indian government Tuesday
said it is considering to price domestic coal on par with
global rates, a move which may increase the cost of the raw
material and lead to a rise in power tariff.
Both the Coal Ministry and the Planning Commission have
favoured using imported coal price as benchmark for domestic
coal.
"In the recent price revision exercise, efforts have been
made to price higher grades of non-coking coal of Eastern
Coalfield Ltd closer to import parity price...it needs to be
carried further," Coal Minister Sriprakash Jaiswal told PTI.
The domestic thermal coal, consumed by power companies to
produce power, are as much as 50 per cent cheaper than the
imported coal.
Globally, coal prices start from USD 45 (nearly Rs 2,000)
per tonne. The government had hiked coal prices by an average
11 per cent last year to Rs 448-2,500 a tonne.
Coal is the primary source of energy and the power sector
alone consumes 85 per cent of the 500 million tonne produced
in the country. Other consumers include cement and steel
makers.
"In Coal India Ltd (CIL), for pricing of coking coal,
import parity price is taken as benchmark and adjusted for
quality," Jaiswal said.
Planning Commission Deputy Chairman Montek Singh
Ahluwalia termed the need for parity in prices as unavoidable
in the wake of the country's increasing coal import needs.
"I would say that (import price parity) is also necessary
...If you are surplus...you can subsidise...but we are coal
importers ...our assessment shows that in the XII Plan import
of coal would increase substantially. So I think linking (coal
prices with global prices) is unavoidable," Ahluwalia said.
He said states should ensure the price parity and also
advocated shifting to this system for other sources of energy.
Increase in coal prices may lead to increase the power
tariff by up to Rs 1.50 per unit, according to industry
estimates.
"The essence of the Integrated Energy Policy statement
was that it (the price policy) should be consistent across
different sources of energy," Ahluwalia added.
"Go to any economist and say that in the world of energy
scarcity...you want to get energy security...you follow any
policy other than linking energy prices with world prices
...especially when you are energy importer...then they would
tell you that this is not the correct thing to do," he said.
Earlier this month, Power Minister SushilKumar Shinde had
said that power tariff could go up by about Re 1 per unit
(kwh) owing to the government's decision to more than double
gas prices to USD 4.20 per mmBtu. MORE PTI