Coal consumers want committee to examine differential rate hike

Piqued at the differential rate hike effected by Coal India Ltd (CIL), the Coal Consumers Association of India is planning to knock on the door of the (Prime Minister's Office) PMO seeking that a committee be set up to examine the entire issue.

At a joint press conference addressed, among others by a former CIL Chairman Shashi Kumar, the association said that there was need for appointing a coal regulator to check such arbitrary price increases.

Mr. Kumar now heads a mining consultancy outfit and is also on the boards of various listed and unlisted companies.

On February 28, CIL announced a three-tiered increase in prices under which spared sectors like power-utilities and IPPs (independent power producers) and the fertilizer sector from a 30 per cent increase in prices which was effective for all other sectors, including steel and cement which had market- driven prices. Prices were also increased for coal produced by Mahanadi Coalfields as also that of the superior A and B grades.

P. K. Chand, chief financial officer of Birla Corp, a major cement producer, said that the burden of 70 per cent of the consumers, that is, the power utilities, was being thrust on the remaining 30 per cent who will now have to suffer a hefty increase in their cost of production. He said that for cement companies, coal costs, which were around 20 per cent of the total production cost, had increased by 40 per cent.

B. Bhushan Agarwal of Shyam Steel said that the sector's coal cost had increased by around 20 per cent as it had for the paper sector.

Mr. Kumar said that CIL might have had a good justification in increasing the price of coal, but such serious discrimination between the sectors was basically wrong.

“Had it increased at the rate of 10 per cent across sectors, there would have been no debate, but in this case some grades, that is, A and B, have seen a 150 per cent increase. This also marks a break with the past practice of effecting a hike of around 4 per cent.”

U. Bhattacharyya , representing CESC, said that the company was affected by the increase in A and B grades as it used these higher grades at its older plants where coal was historically sourced from Eastern Coalfields due to its proximity. A paper manufacturer from Gujarat, however, said that he too used the superior A and B .