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Coal India Switches To New GCV Based Pricing Mechanism

The Union Coal Ministry had advocated the change of pricing mechanism of Coal India Ltd in October 2011. The company (Coal India Ltd. – CIL) is now set to introduce the internationally-accepted gross calorific value (GCV) based mechanism for Coal pricing in India.

Coalfields distribution in India

Coalfields distribution in India

Earlier the prices were decided based on the seven useful heat value (UHV) -based grades, an Indian nomenclature developed in 1970’s. CIL had been planning a changeover to GCV-based sales since 1998. An earlier attempt was made in 2008 which received severe opposition by the power sector.

It was announced by the CIL top management that the new system adopted will be revenue neutral. The existing grades are differentiated by a big range of bandwidth of 600-1,100 kilo calories per kg including power sector. It is said that coal offered under each existing grades will be reclassified accordingly so that the average price does not change. However, a senior official of a private sector power major told that they doubt the quality of the coal considering their poor track record.

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