7.3.2. Coal Prices

Coal India Ltd (CIL) shifted from useful heat value-based (UHV) pricing to gross-calorific value- based (GCV-based) pricing prior to its maiden IPO, to price coal on international parity prices. Since CIL offered coal at a deep discount of up to 50%, CIL has advised the government to change the pricing mechanism so that Indian coal prices were worked out on the basis of market forces and on the basis of international standards. There are even suggestions of a regulator, which would determine Indian coal prices.

Indian coal has high mineral content and a lower calorific value as against imported coal. India is not able to completely bridge the gap between demand and supply of coal as there is insufficient domestic availability of coking coal and power plants designed on imported coal will continue to import for their production. Thus coal imports by India will continue despite efforts by the Centre to step up production to bridge the demand-supply gap.