* India “not in a position” to raise prices – minister
* Pricing mechanism to be reviewed after March
* Shares fall as much as three percent
(Adds details, quote)
By Sanjeev Choudhary
NEW DELHI, Jan 31 (Reuters) – Coal India
reversed a price increase on Tuesday as the world’s biggest coal
miner bowed to pressure from an Indian government which is
struggling with massive power shortages that are a drag on
growth in Asia’s third-largest economy.
The cost of coal rose this month after the company switched
to a new pricing mechanism that links local coal prices with
global benchmarks. Power producers have protested, saying it
only worsened problems created by hefty coal supply shortages.
“Our country is not in a position to increase power prices,”
Coal Minister Sriprakash Jaiswal told reporters.
“When we made a switch to GCV system, there was perhaps an
error by Coal India and prices for coal went up. It could have
impacted the cost of power,” he added, referring to the new
mechanism that links price to gross calorific value (GCV).
He said Coal India would review the new pricing mechanism
based on the impact of the price rollback on its revenues in the
January to March quarter.
Continued…
