Government proposal on imported coal for power projects to hike tariffs

Electricity tariffs are likely to rise as the government is working on a new proposal to import coal for fuel-starved power projects and pass on the higher costs to the consumers. The latest proposal comes in the wake of the government deciding to scrap the much-talked about pooling of imported and domestic coal prices following strong opposition from various states. “The new proposal is under consideration. After finalising the details, it would be sent to the Cabinet Committee on Economic Affairs (CCEA). Then, it is likely to come as a policy directive,” a source in the Power Ministry said. Under the plan, the higher price of imported coal would be passed on to the consumers, the source added. Instead of price pooling, where the prices of domestic and overseas coal would be averaged out, state-run Coal India would import the fuel on behalf of individual power generators. The resulting rise in costs would be made pass through, the source said. As per the source, the proposal on price pooling of coal has been kept away by the government in the wake of strong opposition from various states and also since “it is an election year”. “Even though price pooling was the best way to address the fuel shortages, (many) states did not agree,” the source added.

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