Coal India says price hike not imminent despite higher costs

Workers unload coal from a supply truck at a yard on the outskirts of Ahmedabad

NEW DELHI (Reuters) - State-owned Coal India Ltd is unlikely to increase prices of the fuel imminently despite an upcoming wage hike for its workers and rising diesel and explosives costs, its chairman said on Tuesday.

Higher input costs will lead to price hikes in the years to come, however, he said.

Global coal prices have traded near record highs this year as demand surged due to the relaxation of coronavirus-related restrictions, and as Russia's war on Ukraine upended traditional supply routes for power generation fuels such as natural gas.

"In the prevailing circumstances, where the price of energy has increased substantially, bringing all the stakeholders on board and increasing the price becomes slightly difficult," Chairman Pramod Agrawal said at the company's annual general meeting.

Most of Coal India's output is sold under contract, although some is auctioned.

The miner, which is the world's largest and accounts for over 80% of India's coal - the country's dominant source of power generation - has kept prices steady since 2018, as the government is wary of aggressive pricing having a knock-on effect on the debt-laden electricity distribution sector.

"But we are working on that in the coming years. We will have to increase the price because the price of diesel and the price of explosives have increased. Our input costs have increased," Agrawal said.

Coal India plans to increase spending by over 7% this year to 165 billion rupees, and will continue to ramp up spending, Agrawal said, as it targets an increase in annual output to 1 billion tonnes during the year ended March 2025 from 624 million tonnes in 2021-22.

"I'm quite hopeful that in 2024-25, mechanized evacuation will increase from today's 150 million tonnes to 600 million tonnes," he said.

"That will help us in reducing the environmental load, and to increase our production and dispatch it in a more systematic manner."

(Reporting by Sudarshan Varadhan; Editing by Jan Harvey)