The Clean Environment Cess proposed in the Budget is likely shoot up Coal India's average notified coal price by around 20 per cent.
"Our average coal price (notified segment) is Rs 1,000-1,100 per tonne and an increase of Rs 200 per tonne is almost 20 per cent rise in coal price," a Coal India official told PTI.
Renaming the Clean Energy Cess as Clean Environment Cess, Finance Minister Arun Jaitley in his Budget speech for 2016-17 today proposed to raise the cess on coal, lignite and peat from the current Rs 200 a tonne to Rs 400 per tonne.
Referring to the cess, sources said that this will have a negative impact in terms of power tariff will be much more for south India power plants that procure mostly low-grade coal which is priced at Rs 700-800 per tonne from Mahanadi Coalfields.
This will be because the Rs 200 per tonne additional levy will jack up the coal price by as high as 25 per cent, sources said.
Coal India sells almost one-third of its coal output in grades 10 to 13 and the same is priced at about Rs 700 and 800 per tonne, respectively.
The higher grade coal price goes up to Rs 3,500 a tonne from Coal India in which impact would be less.
The development will have a negative impact on state-run CIL at a time when coal prices globally are crashing and the Coal PSU is struggling to sell more coal and dilute its stock in excess of 40 million tonnes.
