The power generating companies and coal traders in the country are seeking clarification on the move by Coal India Limited (CIL) involving withdrawal of the price rise in coal as well as on how the gross calorific value (GCV) mechanism would prove to be cost neutral to them.

Coal India had proposed a new pricing mechanism that involved linking the prices to the quality of coal. According to estimates, the new pricing policy brought in by the coal monopoly would have resulted in the coal to be become dearer by 12-15 % for the state-owned and private power utilities in the country.

CIL announced its decision to move from "useful heat value" (UHV) based pricing to (gross calorific value) GCV-based price mechanism from the beginning of 2012. The GCV is a internationally accepted pricing mechanism but the UHV mechanism was used in India to consider heat trapped in ash instead of just the heat released by carbon and hydrogen in the coal when it is heated.

CIL was offering the coal in seven categories until December 31, 2011 and had sad that it will move to a system in which it will offer the fuel in 17 price categories. The types vary from the type producing 2,200 kilo calorie to one that produces 7,000 k cal. Each price band differs with 300 k cal from the previous one under the mechanism.

The Maharashtra State Power Generation Company (MahaGenco), Andhra Pradesh Generation Company (APGenco) and others are likely to benefit from the price rollback.