Power procurement cost is likely to increase by around nine paise or 2-4% per unit as Coal India Limited (CIL) has raised non-cooking coal or thermal coal prices. Starting January 9, thermal grade coal price has been revised by CIL by 9%. This hike would compensate for Rs 5,667 crore wage hike agreement signed by the company in October. The price of thermal grade coal with gross calorific value (GCV) of 3100 kcal/kg to 4300 kcal/kg for supply to power sector has been increased by about 15-18%. This along with the levy of evacuation charges of Rs 50 per metric tonne is estimated to increase the cost of generation for coal-based power plants by about 13-15 paise/unit, as per ICRA Ratings estimates. Around 85% of the coal supplies in India are by CIL and its subsidiaries. According to CARE Ratings, the overall hike in coal prices is expected to impact not only power sector but also steel, cement, and fertilizer sectors. Sabyasachi Majumdar, Group Head & Senior Vice President, ICRA Ratings says, “Given that coal-based generator with an automatic pass-through of fuel costs account for about 60% of the total power procured by discoms and assuming a partial pass-through by other IPPs with competitively bid PPAs which account for balance, this translates into about 9 paise per unit increase in power procurement cost for discoms on an all India basis. In turn, assuming the average AT&C loss level at around 23% in the country, we estimate the impact on the cost of power supply per unit sold and retail tariffs (assuming full pass through by state regulators) at around 11 paise per unit or about 2% tariff hike.” The increase in power tariff may also be up to 4% depending on the coal mix, that is a mix of the importer and domestic coal and age of thermal power plant.