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CIL could have helped slash production cost by 12pct - Power CompaniesJanuary 18, 2014
Power sector executives said that CIL could have helped power companies save their production cost by 12%, or 35 paise a unit, if it had kept coal prices lower by using the money that it would pay as interim dividend.
The state run monopoly coal supplier on Tuesday declared a dividend of INR 29 a share. The central government, which holds 90% of the company, will get close to INR 20,000 crore in the form of dividend and dividend distribution tax.
CIL was forced to declare the hefty dividend as the government had to abort its plan to sell a 5% stake in the company because of opposition from labour unions. The stake sale could have helped the government raise about INR 20,000 crore.
According to CIL executives, the company is likely to pay about INR 10,000 crore of the dividend from its profits this year and the rest from its reserves.
This executive said that CIL increased coal prices by a minimum 30% for all thermal coal used by power companies over the past 3 years.
Executive said that "This enabled the company to increase its cash and bank balance from about INR 45,000 crore during 2010 to 2011 to INR 62,000 crore in 2012 to 2013."
However, most of the additional reserves came from higher prices as production did not rise at the same pace. This fiscal year, the company is likely to miss its target on coal production by about 17 million tonnes and sales by some 15 million tonnes.
A power sector executive said that "During 2013, CIL produced 417 million tonnes and would be giving away INR 20,000 crore to the government as dividend and dividend distribution tax. This distributed evenly on the volume of coal produced last year would have led to savings of 35 paise per unit."
According to a senior executive at a large public-sector power producer, India generated around 660 billion units of power last year, most of that using coal supplied by CIL.
Source – Economic Times
The state run monopoly coal supplier on Tuesday declared a dividend of INR 29 a share. The central government, which holds 90% of the company, will get close to INR 20,000 crore in the form of dividend and dividend distribution tax.
CIL was forced to declare the hefty dividend as the government had to abort its plan to sell a 5% stake in the company because of opposition from labour unions. The stake sale could have helped the government raise about INR 20,000 crore.
According to CIL executives, the company is likely to pay about INR 10,000 crore of the dividend from its profits this year and the rest from its reserves.
This executive said that CIL increased coal prices by a minimum 30% for all thermal coal used by power companies over the past 3 years.
Executive said that "This enabled the company to increase its cash and bank balance from about INR 45,000 crore during 2010 to 2011 to INR 62,000 crore in 2012 to 2013."
However, most of the additional reserves came from higher prices as production did not rise at the same pace. This fiscal year, the company is likely to miss its target on coal production by about 17 million tonnes and sales by some 15 million tonnes.
A power sector executive said that "During 2013, CIL produced 417 million tonnes and would be giving away INR 20,000 crore to the government as dividend and dividend distribution tax. This distributed evenly on the volume of coal produced last year would have led to savings of 35 paise per unit."
According to a senior executive at a large public-sector power producer, India generated around 660 billion units of power last year, most of that using coal supplied by CIL.
Source – Economic Times
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