Coal India Ditches Sales Bonus to Help Clear Swollen Stockpiles

  • Decision taken because of fall in international coal prices
  • Miner faces sluggish demand for coal, especially higher grades

Coal India Ltd., the world’s biggest supplier of the fuel, said it will stop charging customers extra fees for higher supplies to help it clear stockpiles amid sluggish demand and a fall in international prices.

The company will forgo so-called performance incentives for higher grades of coal immediately, it said in a statement to stock exchanges Tuesday. The company traditionally charges customers additional fees once supplies exceed 90 percent of the volumes specified in purchase contracts.

“The decision was taken due to fall in international coal prices, improved supply of coal by Coal India and sluggishness in demand in general and higher grades in particular,” the company said in the stock exchange filing.

Unprecedented output at the state-owned monopoly miner has coincided with a slackening of demand from consumers, especially from electricity generators as cash-strapped state distribution companies reduce purchases. Coal inventories at power plants have risen to near record levels, reversing shortages that existed a couple of years ago.

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