State-run miner Coal India will soon decide on correction of prices of the dry

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fuel as its new pricing mechanism has led to more than required hike in rates of the fossil fuel.

The decision was taken in a review meeting of the coal ministry held late last week.

"In the review meeting it was decided that the price correction will be done. Coal India board will very soon decide on the correction of prices," a top official in the Coal Ministry said.

Last week, Coal Minister Sriprakash Jaiswal had said that that Coal India's new pricing mechanism will be reviewed on January 20 and will come out with a solution in the next seven days so that the increase in rates is not more than required.

"Price fixed by them (CIL), in my opinion, is more than required," Jaiswal had said.

"This (the new pricing mechanism) will be reviewed on January 20. We will come out with a solution within a week of the review, so that there should not be overall price increase or the increase should not be more than required, if it is necessary for certain grades (of coal)," he had said.

Clarifying that GCV—based pricing for coal will not annulled, he said that variation in prices would be reviewed.

Till December 31, 2011, CIL used to follow a pricing mechanism based on the Useful Heat Value (UHV) grading system which deducted ash and moisture content from the standard formula.

However from January 1, it shifted to a new pricing mechanism which is based on Gross Calorific Value (GCV) of the coal. Under this system, coal prices have been linked to the actual calorific value or quality of coal.

However, the new GCV mechanism has been opposed by consumers across sectors, including power, cement, aluminium and steel as they feel that prices have risen substantially and it will lead to overall price increase in their respective commodities.