Plan Panel asked to push for coal duty cut

“This ministry had requested the department of revenue twice,and had written to it on February 14 and July 29 to withdraw the customs duty on imported coal. However,the same has not been implemented by it,” the ministry said in its note.

Power Secretary P Uma Shankar,in his February 14 letter,to the revenue ministry had pointed out that supply of the fuel by Coal India Limited to power utilities during the last few years has fallen short of meeting the needs for electricity generation and building stocks of coal at power stations. Consequently,coal imports have been increasing and around 23.2 MT coal was imported by power companies in 2009-10.

In a separate note to the Prime Minister’s office,the power ministry has portrayed a grim picture on coal imports saying with the cost of imported coal shooting up to $120 a tonne and domestic production of the fuel in a dismal state,additional electricity generation of nearly 20,000 megawatt may not be possible in the near future.

It said that in view of the short supply of domestic coal the import dependence will continue. The 5 per cent import on coal makes the exercise of producing power entirely economical unviable,and companies are most likely to pass the burden to power consumers.

Uma Shankar had written to the revenue department on July 29 highlighting the price of global coal which have shot up by 35-40 per cent,and since under the present regulatory regime,Power Purchase Agreements cannot be reviewed there is no case for a pass through of these import costs. Failing to get any response,the power ministry has now approached the Planning Commission for intervention.

CIL’s ability to supply only 347 MT against a requirement of 410 MT this year is of serious concern to the power ministry. The maharatna miner’s projected supply of 415 MT against the need for 615 MT in 2016-17 ( the terminal year of the 12th Plan) indicated a demand-supply gap of 200 MT.

In view of this anticipated shortage,CIL has not yet inked Fuel Supply Agreements for the power projects commissioned during the past two years as well as the current year. The company is meeting coal requirement through ad-hoc arrangements,the ministry added.

Power point

Due to acute paucity of domestic coal,power companies have been increasingly resorting to imports,the cost of coal have shot up by 60% which could make consumers pay more for electricity

In a note to PMO,power ministry says with the cost of imported coal shooting up to $120 a tonne and domestic production of coal in dismal state,additional electricity generation of 20,000 MW may not be possible