Govt okays pass through for coal import; Power rates to rise

Electricity tariff across the country will increase by a minimum 15 to 17 paise per unit after the government today allowed power producers to pass on higher cost of imported coal to consumers.
Finance Minister P Chidambaram said the Cabinet Committee on Economic Affairs has approved the pass through proposal, which would result increase in power tariff.
"There will be small increase in power tariff. It will be very marginal increase on unit cost of power depending upon the cost of import of coal," Chidambaram said briefing the media.
"They (IPPs) can import coal themselves if they wish, otherwise Coal India will import and this additional price which we pay for imported coal, obviously, has to be pass through in the power tariff," he added.

Chidambaram said: "It is better to have power and pay a few paise more or not have power at all. It is better to have our power plants working and producing power or keep them shut down after investing thousands of crores. For every MW today, I think the capital cost is between Rs 5-6 crore."
A Coal Ministry official said the move would result in higher power tariff to consumers.

"Though the quantum of the coal to imported has not been worked out but as per estimates if Coal India imports 15 per cent of coal, it would result in increase in electricity tariff by 15 paise to 17 paise per unit," the official said.

Chidambaram further said the government has initiated measures to augment production and "by first week of July certain other decisions will be taken to open up more coal mines and to produce more coal".
In the meanwhile, coal imports were necessary, he added.
"In the interim period, there is no option but to import some coal. Imported coal is costlier than domestic coal. We are guaranteeing 65 per cent this year to 75 per cent by the end of 12th Plan (by Coal India) for each of these 78,000 MW capacity," he said.