Power to cost more as govt hikes coal royalty rates

NEW DELHI: Both industrial and domestic consumers will have to shell out more money for electricity following a hefty 14 per cent hike in the royalty that states charge on coal, the major input for power generation.

The decision to increase the royalty on coal by an average of 14 per cent was taken by the Cabinet Committee on Economic Affairs (CCEA) on persistent demand from the coal- producing states.

Briefing reporters after the CCEA meeting, Finance Minister P Chidambaram said, "Any revision in cost will reflect in prices at the consumer level."

Asked whether he was not concerned over the impact of royalty revision on inflation, the Finance Minister said it was 'the right of the states' to seek revision in the rates and an assurance was also given to them in Parliament.

Chidambaram said the increase in revenue for the states, barring West Bengal, will be 24 per cent for coal and 27 per cent for lignite. "The revenues of the coal-producing states would increase to Rs 3,718 crore from the current Rs 3,000 crore," he said.

The rates as of August 2002 varied between 13 per cent 20 per cent which would now go up to 15 per cent and 31 per cent.

The decision to revise royalty was taken after the principles of determining rates were considered by the Economic Advisory Council (EAC) to the Prime Minister and a Study Group of the Ministry of Coal.