The Coal Ministry, on Tuesday, admitted that Coal India Limited (CIL) had made some mistakes in adopting the new system of coal pricing mechanism and set January 30 deadline for downward revision of coal prices, which had caused a hue and cry among various stakeholders.
Coal Minister Sriprakash Jaiswal told journalists here that a new pricing mechanism, which would be more rationale and addressed the concerns of all stakeholders, would be put in place by the end of this month.
“By January 30, the result would be in front of you. The coal price would be revised downward. Coal India Limited (CIL) has made some mistake in the system adopted for pricing of coal under the new mechanism,” he added.
The development comes in the wake of a Coal Ministry review meeting on the pricing mechanism held last week, where it was decided that a correction in coal prices would be effected.
The new pricing mechanism based on gross calorific value (GCV), which came into force on January 1, had led to an increase in rates of the fossil fuel, though the Coal Ministry had indicated the new formula would be revenue-neutral.
Last week, Mr. Jaiswal said CIL's new pricing mechanism would be reviewed on January 20 and a solution would be worked out so that the increase in rates was not more than required. Clarifying that the GCV-based pricing for coal would not be annulled, he said the variation in prices would be reviewed.
Till December 31, 2011, CIL used to follow a pricing mechanism based on the useful heat value (UHV) of coal, which deducted ash and moisture content from the standard formula. However, from January 1, it shifted to a new pricing mechanism based on the GCV of coal. Under this system, coal prices have been linked to the actual calorific value or quality of coal.