Mining major Coal India Ltd might raise prices of the dry fuel by at least 10-11 percent to mitigate the impact of increased costs and an impending wage revision, sources close to the development said.
The Kolkata-headquartered company had last hiked coal prices in 2018. Its current average regulated price realisation is Rs 1,394 per tonne.
There has been no price rise of fuel supply agreement coal since the last few years. Costs have jumped on all fronts and a wage revision is due.A minimum 10-11 percent increase is necessary to avoid bottomline erosion.
Coal India has informally discussed the matter with board members and most of them have acknowledged the need to hike prices of coal. The miner is awaiting the government's nod following which it will take the final call, they told PTI.
Chairman and Managing Director Pramod Agarwal had recently said the costs of the miner had gone up, and there is no reason that it should not increase prices of the dry fuel.
Within FSA coal, the price for the power sector is cheaper than non-power industrial consumers like steel and cement. "On an average, non-power coal is 15-20 percent higher than power consumers," the sources said.
The wage revision, which is due from July this year, is likely to cost the miner an additional Rs 10,000 crore, they said. The current annual wage cost is around USD 5 billion.
Coal India had in 2017 signed a wage agreement, with worker unions proposing a 20 percent hike in salaries for five years.
Rise in coal prices usually has a ripple effect on the economy, beginning with an increase in electricity cost.
A 10 percent price hike could result in a 20-30 paisa per-unit jump in power price, the sources said.
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