Power tariff set to rise across India

Electricity tariff across India may increase as the government has allowed private companies to import coal on a cost-plus basis under a mechanism that would see the entire additional cost of imports passed on to the consumers. According to Indian coal minister, Sriprakash Jaiswal, "Cabinet Committee on Economic Affairs (CCEA) has approved coal price pooling by pass-through mechanism and the companies can import coal on cost-plus basis." Jaiswal, who was speaking today at Fourth National Coal Conference organized by key business chamber Associated Chamber of Commerce and Industry of India (ASSOCHAM), pointed out that under the pass-through mechanism, the entire additional cost of imports would be passed on to the consumers. In a separate media briefing India's Finance minister P Chidambaram too revealed that the move 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. "To achieve the projected growth in production a number of new projects are planned to be taken up in Public Sector Undertakings (PSUs) coal companies and a number of coal blocks have been allocated to various private and government companies and few more are in the pipeline for allocation. Besides, supplies would also need to be made good through imports," said minister of coal. The move to pass on additional costs of coal imports on consumers is targeted at bringing more investment in power generation that would see generation of almost 78,000 MW of electricity. On the occasion Jaiswal said the government is proposing to offer seven Open Cast Mines of total capacity of about 25 million tonnes to Mine Developer-cum-Operators (MDOs) within this year. He also noted that the technology development is critical in enhancing production. With a view to ensure better production, productivity and safety coal companies need to focus more on modernization and technology development. Jaiswal said, "India is facing tough challenges in meeting rapidly increasing energy requirements. Coal being the main stay of our energy most of the additional generation capacities are being planned and implemented on the basis of this fuel."