Coal India to charge customers on energy content in coal

15 January 2018

Coal India Ltd. has decided to shift to a pricing system under which customers would be billed on the basis of exact energy content per kilogram of coal in every consignment that is sold to them. The new system would be effective from April 1, 2018.

At present, prices of coal is fixed for a range of energy content values in coal which is typically a band based pricing system. Customers pay a certain price per tonne if the heat content lies within these predefined ranges. There are 17 grades at present.

The new system will bring down the number of bands to 10. Each band would have a definite rate in Rupees or paise for one unit of energy in coal. Billing would be on the basis of this rate multiplied by total energy content in one kilogram of coal for each consignment.

In technical terms, coal price will be based on Rupees per kilo calorie — that is Rupees per unit of energy.

“It is a global system of coal pricing and we would put in place systems for measuring energy content for each consignment. It will lead to financial benefit for customers who pay for what they get,” said Coal India chairman, Gopal Singh.

“If one looks at the new price coefficients, the pricing graph will look much linear and simpler compared to the previous practice. This enables coal consumers to calculate the basic price of non-coking coal of any mine of CIL based on its energy content and that makes the pricing system much simpler and transparent,” he said.

It will also act as motivation to mine managers as they would get incentivised on the basis on definite energy content and not on a range of content for which price is fixed feels executives.

Source: THE ECONOMIC TIMES