Electricity prices set to be hiked by 50 to 70p/unit as Centre plans pooling of coal rates

Tuesday, 21 October 2014 06:51 Pradeep B

CILEven as the government looks at providing electricity 24/7 for all, consumers should brace for paying between 50 to 70 paisa more for one unit of electricity they consume. The Centre is planning to revive a proposal to pool the prices of imported and domestic coal for power plants commissioned after 2009 to ensure uninterrupted fuel supply to units that would be important to provide electricity to all.

Officials in the power ministry said that the pooling issue is likely to be taken up by the Cabinet later this month. For the post-2009 power plants (roughly 78000 MW), Coal India is providing coal linkage but that is sufficient to run plants at roughly 68% capacity even on imported coal. With pooled pricing, fuel could be provided to run plants at 85% of their capacity helping in higher supplies.

Many of post 2009 power plants are also without any coal linkage. These could also benefit from the scheme. The power ministry feels projects worth over Rs 1 lakh crore can take off if the government agrees to pooling.

About half of these plants are privately owned and the rest with PSUs, primarily NTPC.

Under price pooling of coal, Coal India will buy imported coal and blend it with its own stock. As imported coal is over 50% more expensive than domestic coal, the pooling will make coal costlier than the domestic fuel, raising the power tariff by 75 paise in the remaining months of this fiscal. Subsequently, the tariff hike will be 45-50 paise in 2015-16 and 5-10 paise in 2016-17, according to coal ministry officials.

Initially the scheme may be limited to plants that have signed power purchase agreements with state electricity boards on a tariif decided by the power regulator on a cost plus basis. Later it may be extended to all. With international coal prices on the lower side now, pooling tariff could be brought down further.

Source- Indian Express