How Coal India Price Hike Will Impact Consumers

When it comes to commodities, the energy space is outperforming the whole sector. Coal India has hiked the prices of its high-grade coal by 8 per cent, and thus consumers are likely to pay 12 to 18 paisa per unit.

Coal India increased high-grade coal prices after five years and mostly it has been done in two categories, one is power utilities, fertilizers, and defence sector. The other price hike impact is likely to take place for companies using non-cooking coal.

This hike has been done after five years. Even at the peak of Covid-19 pandemic and during the Ukraine-Russia war in September 2022 when the prices had gone up to 145 dollars per ton there was no price hike. However, now that the prices have come down to 100 dollars per ton, the companies have been prompted to take this hike mostly because of an increase in its employee cost or the wage bill which has increased by Rs 6000 crore.

The impact

Coal India hiked price will help it to offset its increased wage bills. This hike will put cost pressure on industries using high-grade coal.

Power tariff to go up by 12 to 18 paise per plant using high-grade coal. There will be cascading impact on power tariffs for mostly the plants which will be using high-grade coal the impact will b neutral as most of the power plants in India do not use very high-grade coal.

There is likely going to be no price-hike in the near future due to general elections, but industries like steel and fertilisers using non-cooking, steam coal or thermal coal can have a major impact and the industry may witness a price hike.