December 03, 2008

CIL plans extending coal varieties based on useful heat value

BL reported that Coal India Limited is now hopeful of broad basing its product range from the existing 8 grades to approximately 30 varieties within the set parameters of useful heat value based gradation system. The switch over is likely to take place in the next 6 months.

The proposed product range will narrow down the useful heat value within the grades from the existing band of 900 to 1,100 kilo calorie to 200 to 300 kilo calorie. Coupled with the present move to switch over from linkage to the fuel supply agreement regime, the broad basing of product range with separate price tags for each variety, if approved by the centre, will improve CIL’s earnings substantially in the future.

A CIL official said that "The existing calorie band between the grades is a built in disincentive for producers for not attending to quality. Redefining the product range will address the issue."

He added that such classification for raw coal may be done away with once CIL attains its vision of supplying only processed washed coal in the future, thereby creating an environment for a move to gross calorific value based product classification.

This move comes after CIL failed to convince the centre for a switch over to the internationally accepted gross calorific value based gradation for its produce,