Twitter
Advertisement

Govt allows power firms to pass on imported coal costs

Latest News
article-main
FacebookTwitterWhatsappLinkedin

Electricity will likely become costlier to the tune of 15-25 paise per unit for some people, following Friday’s decision by the Cabinet Committee on Economic Affairs (CCEA) to allow certain power companies to pass on the rising cost of imported coal to consumers.

The government’s decision to augment power generation by using imported coal was a response to inadequate domestic output that was leading to power cuts across the country.

The decision, however, applies to only those power plants that were commissioned after March 2009. Such projects have a capacity to produce 78,000 mega watts (mw) of power annually.

Most of them have been stalled for long or were running below capacity due to lack of coal supply, and will now look for a revival.

Thanks to Friday’s decision, the country’s leading miner Coal India Limited (CIL) can now import the fuel and supply it to  thermal power plants (TPP) on a cost-plus basis. TPPs can also import coal and pass on the cost to their consumers.

The upward power tariff revision is, however, subject to regulatory approvals.

Coal minister Sriprakash Jaiswal said the quantum of tariff hike will depend on the amount of coal imported.

Finance minister P Chidambaram said, “There will be a marginal increase in power tariff. There is a saying that no power is costlier than no power. The choice is, you pay more for electricity or do not get electricity at all. It is better to have power plants working.”

CIL can now sign fuel supply agreements (FSAs) with various power plants, potentially adding 78,000 mw to the country’s electricity output. Based on the overall domestic availability of coal and actual requirements, FSAs will be signed for domestic coal quantity of 65-75% of annual contracted quantity for the remaining four years (2013-14 to 2016-17) of the 12th Five-Year Plan.

Sources at Tata Power and Reliance Infrastructure (Rinfra), which supply power to Mumbai, said Friday’s decision would not impact consumers in the metro.

“This order is only limited to domestic coal-based plants that were dependent on imports to meet the domestic coal shortfall, wherein it replaces the earlier planned price-pooling mechanism,” said one source.

The Central Electricity Regulatory Commission (CERC) is already receptive to the idea of allowing compensation to power producers for higher prices of imported coal.

CERC had earlier given relief to Adani Power and Tata Power by allowing them to raise their tariffs for their plants, both of which are located in Mundra, Gujarat.

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement