As Coal India Ltd Gears Up to Revise Wages, the Possibility of Coal Prices Soar Becomes Apparent
A Potential Price Rise For Coal Awaits As CIL Gets Ready To Correct Emolument
Coal India Limited (CIL), the most significant coal miner in the country, is expected to hike its notified prices after 5 years. This comes as a result of the previously announced wage hike, which will take place in a month's span.
The price increase for coal upon CIL's approval could cause a rise in energy taxes by around 3.5 percent.
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CIL's notified prices will rise by 6-9 percent after the implementation of a 19 percent hike in wages to keep the margins for operations within 8-10%. In case other prices stay unchanged, the energy sector's landed costs will rise to INR 3,105-INR 3,115 per tonne by 2.5-3.5 percent, with energy tax likely to rise within the same range. On the other hand, the Non-power sector will witness a rise in price by 3-4 percent on the landed costs to INR 3,350-INR 3,360 per tonne.
The decided hike in salaries, which will be an advantageous for about 238,000 (non-executive workers), has added an extra liability of around INR 6000 crore on the CIL. The salaries of (non-executive workers) accounting for the company, 94 percent of the workforce, are modified every 5 years.
In this case, CIL is facing immense pressure to rationalise its prices for coal in order to preserve sufficient supplies in the summer season as well as winter.
Besides fulfilling the country's rising energy demand, the coal price hike is crucial for maintaining CIL's profitability and also to saving its subsidiaries (Eastern Coalfields Ltd (ECL), Western Coalfields Ltd. (WCL) and Bharat Coking Coal Ltd (BCCL)) from undergoing a monetary crisis.
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According to Procurement Resource, Coal India Limited (CIL), India's most prominent coal miner, will increase its employee wages as well as its notified prices after 5 years. This increase is vital for maintaining the profitability of the company whilst saving its subsidiaries from a monetary crisis. This price rise could also lead to an increase in energy tax.
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