Power tariffs set to rise as Coal India raises prices by 5%

KOLKATA: Coal IndiaBSE 1.16 % (CIL) has increased prices by 4.7% on average, a move that power producers say is likely to lead to an increase in power tariffs by 7 paise per unit to 45 paise. 

CIL on Tuesday reduced prices of two premium varieties of coal by 12% while increasing prices of the rest, barring one, by 10%. It had last increased prices in January 2011. 

"Due to the rationalisation of coal prices, there will be an approximate additional revenue of Rs 2,119.36 crore for the balance period of FY2013-14 while the yearly additional revenue will be around Rs 2,511.58 crore," said CIL Chairman 
S Narsing Rao. 

"We have reduced prices of the two premium categories to bring them on a par with international prices, which have tanked. However, in order to make the price decrease revenue neutral and cover rising expenditure over the last few months on account of salary rise and diesel costs, we have increased prices of the rest." 

Rao said the salary bill of contract workers had increased by about 1,000 crore a year and the expenditure on diesel had risen by about 800 crore. Power generation should cost about 3.5% more on average, he added. A senior 
NTPCBSE -0.61 % official told ET that the cost of power at its Farakka and Kahalgoan units would rise by 36 paise to 42 paise per unit.