KOLKATA. Coal India Ltd (CIL), the world’s largest coal producer, is facing a significant increase in its operating costs following a sharp rise in diesel prices. The company consumes nearly 42 crore litres of diesel annually to run its fleet of around 2,500 heavy-duty dumpers, excavators and other mining equipment. Diesel prices for Coal India, linked to international benchmarks under its supply arrangements with oil marketing companies, have reportedly climbed to around ₹140 per litre from approximately ₹90 per litre before the war-related price escalation.
The ₹50-per-litre increase translates into an additional annual fuel expenditure of nearly ₹2,100 crore at existing consumption levels. This represents a substantial increase in Coal India’s energy bill, adding further pressure to its mining and transportation costs. With diesel being a critical input in opencast mining operations, sustained high fuel prices could significantly impact the company’s cost of coal production.
The higher operating expenditure could ultimately feed into the cost of coal supplied to the power sector, particularly if elevated diesel prices persist. Since coal accounts for a major share of India’s electricity generation, any sustained increase in domestic coal production costs could add to the fuel cost burden of thermal power generators and potentially put upward pressure on electricity generation costs. The extent of the impact on power tariffs, however, will depend on Coal India’s pricing decisions, cost absorption and the pass-through of higher fuel costs to power producers.
