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CIL plans price hike to offset burden of clean energy cess

29th July 2014

By: Ajoy K Das

Creamer Media Correspondent

  

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KOLKATA (miningweekly.com) – Indian major Coal India Limited (CIL) is planning to hike its prices for domestic supplies within the next month.

According to a company official, the CIL board of directors would be meeting in August to finalise the extent of the price hike to be effected.

The hike had been necessitated by the Indian government’s move to double the clean energy cess to Rs100 ($1.6) a ton, which CIL proposes to pass on to its customers through an increase in coal prices, the official said.

While presenting the federal Budget 2014/15 earlier this month, Finance Minister Arun Jaitley proposed doubling the clean energy cess on coal and lignite to increase research and development funding and to promote clean energy technologies.

CIL had not yet disclosed the financial impact of the higher cess, but quick back-of-envelope estimates indicated that assuming coal sales of 520-million tonnes during the current financial year, the miner would have to pay $866-million on account of the clean energy cess, against the $411-million it paid to the government in 2013/14.

In May 2013, CIL reduced prices of two premium grades by 12% and increased prices of other grades by 10%, resulting an average higher net realisation of about 4.7%. However, recently the miner increased prices for coal from select mines, including a $6/t increase for coal from the Rajmahal mines in eastern India.

Edited by Esmarie Iannucci
Creamer Media Senior Deputy Editor: Australasia

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