Coal India expected to switch from UHV to GCV benchmark in 2012

In a move to adopt best international practices, Coal India may benchmark its output to gross calorific value (GCV) of coal from 1 January 2012 onwards. The step is expected to expand both the product as well as price range of the offerings substantially.

Coal India currently sells seven types of thermal coal, benchmarked against useful heat value (UHV), making India the only of the major producing countries to do so. UHV defines energy in every kilogram of coal after discounting the moisture and ash content.

Confirming the development, a senior Coal India official said to The Hindu Businessline that the entire exercise would be “revenue neutral” to the company as coal offered under each existing grades — classified by a wide UHV bandwidth 600kcal/kg to 1100kcal/kg — will be re-classified in a manner so that the average price remains the same.

For example, Coal India subsidiary Eastern Coalfields sells D-grade coal of 4200-4940 kcal/kg UHV to the power sector at a notified price of INR1040/t. In the changed environment, ECL may reclassify the same coal in a number of varieties priced at higher or lower than INR1040/t depending on the GCV content.  “The changeover to the GCV-based system will leave us with larger number of offerings, each classified by a narrower bandwidth of energy content. While this may increase the cost for some consumers linked to better mines, many others will end up paying less,” the official said adding that the overall cost of fuel would not be impacted.