Coal India Has Strong Case To Increase Prices, Talks On: CMD Agrawal

Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and the hike could be effected “very soon” as discussions are underway with stakeholders.

Agrawal also said he is confident the mining behemoth would achieve its production target of 1 billion tonnes by 2025-26 (FY26).

“There is a strong case for increasing coal prices, as that has not happened in the past five-odd years. This year, the wage negotiation has taken place as well. This will have an impact on CIL’s financial condition, especially for a few subsidiaries like Eastern Coalfields, Western Coalfields, and Bharat Coking Coal where the cost of manpower is very high. There will be a lot of problems if prices are not hiked,” Agrawal said at the Indian Coal Markets Conference here organised by mjunction.

The last price hike by the state-owned miner was in January 2018 — it was a little over 10 per cent.

“It is such a critical thing for the economic development of the country that it cannot be increased unilaterally,” he, however, added.

Asked when a final decision was likely, B Veera Reddy, director (technical) and director (finance)-additional charge, CIL, said, “There are a lot of stakeholders and the power ministry… we need to reach a consensus. We are in discussions with the Ministry of Coal.”

Even as it weighs in on the possibility of a price hike, CIL is stepping up production.

This year, it is on course to achieve 700 million tonnes (mt).

The target for next year is being kept at 780 mt. The additional 80 mt for next year is a “stiff target”, but CIL is committed to meeting the requirements of the nation. By FY26, it will reach the 1-billion tonne production target.

But it will hinge on factors like the need of the country and the growth of the private sector, said Agrawal.

“If not 1 billion (tonne), I am hopeful that the requirement would be in that range because our coal is one of the cheapest in the world,” he added.

Captive/commercial coal mine

The country is eyeing increased production from mines auctioned for captive and commercial use. Joining the conference virtually, Coal Secretary Amrit Lal Meena said this year, the share of captive/commercial would be 15 per cent of total coal production of the country.

Last year, production was 89 mt. This year, it is likely to be 112 mt. “In the next two to three years, we are hopeful that commercial and captive mines will increase production,” said Meena.

The target for 2023-24 from captive/commercial is 161 mt.

He said the ministry is working on a strategy to enhance the production of coal, so that not just the power sector but all other sectors of the economy have adequate coal and possibly think about exports.

Coal India Price Hike

• Discussions with stakeholders on for price increase
• Cost push, new wage pact primary factors behind consideration
• Without hike, high manpower cost to impact ECL, WCL, BCCL
• Last hike of more than 10 per cent was in January 2018