Coal India’s price hike plan likely to be delayed amid mounting dues

Coal India’s plan to raise prices, which has been pending for some time, is likely to be delayed further as the mining major has failed to secure the nod of key stakeholders against an outstanding of whopping Rs 24,000-25,000 crore.

The recent coal crisis at power plants in several parts of the country has caused the dry fuel producer to relax payment terms and push coal to ensure that there is the least shortage of power to keep the economy on track.

The agenda of price hike is unlikely to be placed before the upcoming board meeting on November 12 as the board has not yet received the go-ahead from important stakeholders – read union government – in the wake of the chaos of coal shortage since last month, though the global price of coal had risen significantly.

Unrestricted supply of the dry fuel amid crisis in power plants has resulted in a further jump in dues that has already reached around Rs 24,000-25,000 crore, the source said.

Coal dispatch to the power sector has increased by 27.13 per cent to 59.73 million tonnes in October, owing to a spurt in power demand amid an unprecedented rise in import prices. The coal major was attempting to reach 2 million tonnes per day production but till November 6 the average production was 1.6 million tonnes.

States such as Maharashtra, Rajasthan, Madhya Pradesh, Karnataka, West Bengal and Tamil Nadu owe huge sums of money to Coal India. Price hike is inevitable with pending wage revision that will directly increase its wage cost by around 10 per cent.

Without increasing price, it will not be possible for Coal India to absorb the wage hike. Already, some subsidiaries are facing cash problems due to high dues and had to resort to loans.  The Kolkata-headquartered company had last hiked coal prices in 2018. Its current average regulated price realisation is Rs 1,394 per tonne.

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