The government Friday approved a mechanism under which power companies will be allowed to hike electricity price if the cost of imported coal goes up.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Manmohan Singh, approved the new mechanism at a meeting here.
Finance Minister P. Chidambaram told reporters after the cabinet meeting that the rationale behind the decision was to ensure adequate supply of coal to the power companies.
"There will be a small increase in power tariffs," Chidambaram said.
The finance minister said Coal India will do the bulk of the imports and supply it to power firms on a "cost-plus" basis.
However, power companies can also import coal on their own. They will be allowed to adjust the prices depending on the import cost.
Chidambaram said 65-70 percent of coal requirements of the power companies will be met from domestic sources.
You’ve reached your limit of 10 free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →
Smart Quarterly
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app