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Coal India may hike coal prices by up to Rs 175 a tonne to close the gap between domestic and international rates. CIL has not hiked prices since 2007 and this has resulted in a huge difference in prices.
"CIL is considering to raise the coal prices by about 10 per cent across-the-board soon," sources told PTI. Domestic coal prices range between Rs 770 and Rs 1,700 a tonne. If hiked by 10 per cent, the prices would go up by Rs 175 a tonne.
A top Coal India official, however, said the hike would be 'modest' and said, 'our prices are 50 per cent discounted as compared to the global prices. Now there has been a major wage revision resulting in over Rs 4,000 crore (Rs 40 billion) additional financial burden on us which cannot be met through production and productivity alone.'
The official said that CIL had witnessed a sharp drop in retained earnings because of the wage-built annual impact and the company's retained profit could be only Rs 300 crore on a turnover of about Rs 45,000 crore last year.
Coal is a key component for cement, power and steel industries and companies in these sectors would have to bear additional costs if the price of coal is increased.
Coal Minister Sriprakash Jaiswal had earlier told PTI that he would call on Prime Minister Manmohan Singh to discuss hiking of coal prices. Also, Coal India has been stating that its projects worth multi-billion dollar may become unviable if prices are not raised.
"Our prices starting at about $16 a tonne are over 50 per cent cheaper than the prevailing global rates. We are seeking a marginal increase as we do not wish to lose the tag of provider of cheap coal to end users," Coal India chairman Partha S Bhattacharyya had said.
The coal prices were last revised marginally in 2007, with only three revisions since deregulation of prices in 2000. The coal major is targeting a production of 435 million tonne this fiscal against 403.73 million tonnes achieved in 2008-09.