Power to cost more as govt hikes coal royalty

Power to cost more as govt hikes coal royalty
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First Published: Thu, Jun 21 2007. 07 39 PM IST
Updated: Thu, Jun 21 2007. 07 39 PM IST
PTI
New Delhi: Both industrial and domestic consumers will have to shell out more money for electricity following a hefty 14% 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% 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% for coal and 27% for lignite. “The revenues of the coal-producing states would increase to Rs3,718 crore from the current Rs3,000 crore,” he said.
The rates as of August 2002 were 13-20%, and would now go up to 15-31%.
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.
The Finance Minister said as royalty on coal had not been revised since 2002, producing states had been demanding for an enhancement in the rates.
“It is contended (by states) that while coal companies have been revising the prices frequently and since the royalty rates are fixed on tonnage basis, the benefit of higher prices has not been shared with the producing states. Consequently, the share of royalty as a percentage of coal prices has declined,” he pointed out.
Coal-fired generating units account for 70% of the power produced in the country.
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First Published: Thu, Jun 21 2007. 07 39 PM IST