Power-intensive sectors to feel the CIL pinch

Our Bureau Kolkata. Feb. 27 | Updated on November 10, 2017 Published on February 27, 2011


Coal India Ltd's decision to effect a steep prices increase (30 per cent) for non-regulated sectors, especially for the coal produced by Orissa-based Mahanadi Coalfields (54 per cent), will have wide ranging impact on power-intensive sectors. Tariff of a section of power utilities may also go up.


According to the Chairman and Managing Director, Mr B.L. Bagra, the margins of the National Aluminium Company (NALCO) will be impacted by a clear Rs 6,400 a tonne (30 per cent of cash margin of Rs 21,000 a tonne). NALCO consumes 6 mt of coal from MCL to run its 1,200-MW captive power plant. “We may have to absorb the cost push partly or fully depending on the market conditions,” Mr Bagra told Business Line.


In the steel sector, Vizag Steel depends entirely on CIL supplies for captive generation and is expecting a sharp cost push.

The SAIL Chairman, Mr S.C. Verma, however, said that the company was largely unaffected by the CIL price rise. SAIL consumes power from its joint ventures having captive coal blocks. The company is paying import-linked prices to CIL for coking coal.


While comments were not available from cement majors UltraTech or Lafarge; Mr P.K. Chand, Chief Financial Officer of Birla Corporation and President of the Coal Consumers Association of India, said that cement prices may go up by Rs 10 a bag of 50 kg.


According to NTPC, over 20 per cent of its total generation is dependent on MCL supplies. The company consumes 22 mt (of 160 mt total consumption) of coal from Mahanadi. A back-of-the-envelope calculation suggests that NTPC's outgo on coal will increase by approximately Rs 200 crore a year.

According to Mr. Malay De, Principal Secretary of Power, West Bengal, the power supplied by State utility may face 6 paise cost push. The State utilities of West Bengal (9 mt), Tamil Nadu (10 mt), Andhra Pradesh (10 mt) are largely dependent on MCL coal.

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Published on February 27, 2011
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