• Coal year-end review: Consumers to gain Rs 69,310 crore from reduced power tariff

    Power consumers are likely to gain to the extent of Rs 69,310 crore from the reduction in electricity tariff enabled by the auction of nine coal blocks to power sector firms so far, power ministry said in a statement today.

    The auction proceeds from 83 coal mines allocated so far are estimated at over Rs 3.95 lakh crore over the life of the mines, which will be available to the coal bearing states. The actual revenue generated from these coal mines up to October 2016 is Rs 2,779 crore excluding royalty, cess and taxes, the ministry said.

    “The benefit to consumers in terms of reduction of electricity tariff from auction of 9 coal blocks to ‘Power’ Sector is likely to be about Rs 69,310.97 crore,” the ministry said in the statement.

    As a step towards commercial mining, the government had put 16 coal mines on offer for allotment to state PSUs for sale of coal. Of these, eight coal mines were earmarked for state PSUs of host states while the rest 8 coal mines were earmarked for state PSUs of non-host States. Also, 5 coal mines have been allocated to state PSUs of coal bearing host states and 2 coal mines have been allocated to state PSUs of non-host states for sale of coal.

    The ministry also informed the production of raw coal in the country during April-November 2016-17 was 391 million tonne as compared to 385 MT during the corresponding period of previous year, an overall growth of 1.6 per cent. “The coal ministry has given special focus to decrease coal imports. Government has saved about Rs 20,000 crore in the year 2015-16 and about Rs 4,844 crore in the first four months of the current year. The efforts on this front would lead to a further replacement of 15.37 MT of imported coal by March 2017,” the statement said.

    The coal sector’s performance was impacted due to poor lifting of coal by a few power utilities and less demand of higher grade coal at South Eastern Coalfields. Thanks to high growth in production, power plants were flush with coal stock of 27 days in April 2016. CIL started the current fiscal with an opening stock of 57.7 MT,resulting into accumulation of coal stocks at the pitheads. The ministry said special measures such as spot e-auction and linkage rationalization were undertaken to clear the accumulated stock of coal.

    “Thus, during April-November 2016, as against the production of 323.64 MT, 340.03 MT was dispatched by CIL. Sporadic Law and Order problems at MCL and CCL have also affected production and offtake,” the statement said. Other issues that impacted dispatch included heavy rainfall in mining areas, cement plants switching over to pet coke and logistical bottlenecks.

    While the ministry highlighted the progress made by the coal sector over the past year, the industry expressed displeasure on various counts. “The government is curtailing CIL Production due to falling demand but is still continuing with coal imports. This is only due to bloated-up coal prices and abnormally high taxes,” Rajiv Agarwal, Secretary at Indian Captive Power Producers Association (ICPPA) told ETEnergyWorld.

    He also said, assuming the government agreed to forego entire tax on coal, the cost of coal will reduce by 50 per cent and the corresponding electricity cost by 40 per cent. This will turn all the discoms profitable. “Prices can be reduced by further 50 per cent if CIL is able to bring its manpower costs to International norms. Power cost will further reduce if costly NTPC purchase pacts are rationalized,” he said.

    The government had earlier this week allowed public and private power producers to swap their coal supplies with a view to reducing the cost of electricity by ensuring more efficient fuel usage. It may eventually extend the facility to other coal-consuming industries.  Christian Covington Jersey

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