Rising cost of imported coal may impact power tariffs

GLOBAL COAL PRICES, which were trading at a lower range in the first half of the current financial year, are likely to see a spurt in the second half, likely having an impact on domestic e-auction prices of the fuel as well.

- ARUNIMA BHARADWAJ

• PRICES OF IMPORTED COAL SEEN RISING IN H2

However, Coal India may still not revise the prices up through the year, analysts said. The state-run company may come under greater pressure to scale up output to mitigate the effect of higher prices of imported coal on the power companies and electricity tariffs to the consumers.

Domestic prices are currently at a discount of 40-50% to international markets, experts say.

India meets over a fifth of its coal consumption via imports, and the import bill stood at close to ₹3.9 trillion last year. Sales via e-auction are roughly 15% of the domestic coal market. The likely rise in imported coal prices is owing to the increase in the demand for the fuel ahead of the winter season, which is coupled with a supply crunch.

Average price of imported coal from Indonesia increased to $60.3 per tonne in October from $53.5 in September. In the domestic market, coal sold under the e-auctions is being traded in the range of around ₹3,200 per tonne compared to ₹4,800 per tonne last year.