The Hindu Business Line : Power tariff hikes on cards — NTPC, SEB expenses `hauled' over the coals

INDUSTRIAL and domestic consumers will have to brace themselves up to face increased power tariffs across the country next year, with National Thermal Power Corporation (NTPC) and most State electricity boards (SEBs) slated to jack up tariffs to counter increased domestic coal prices and having to use expensive imported coal to tide over shortage in domestic production.

The country's largest power producer — state-owned NTPC Ltd — faces an incremental fuel cost of 7 paise per unit purely on account of an increase in domestic coal prices, besides an expected jump in tariffs on account of the use of 3.98 million tonnes of imported coal for several of its stations since the second half of the year.

According to Government officials, NTPC faces a hefty increase in fuel costs which could go up to Rs 1.20 per unit, against its current average fuel cost of around 65 paise per unit, for its Talcher and Rihand expansion projects. Some of its newer stations coming up next year, including the ones at Kahalgaon and Vindhyachal, will also depend heavily on imported coal. Also, NTPC faces increased transportation costs for moving imported coal using the Railways from the ports to its non-coastal stations.

While NTPC accounts for around 30 per cent of the total power generated in the country, coal-fired generating stations of SEBs — which account for much of the remaining generation — are also faced with increased costs on account of coal imports. These include the Maharashtra State Electricity Board, which is in the process of importing around 1.38 million tonnes (MT) of coal, the Tamil Nadu Electricity Board, which is importing 1.56 MT coal, and the Punjab SEB, with imports of 0.5 MT. Reliance Energy Ltd (0.42 MT) is among the private utilities importing coal this fiscal, industry sources said.

Also, with the Central Electricity Regulatory Commission planning to fix trading margins at a higher 6 paise per unit of electricity, instead of 2 paise per unit proposed earlier, some power trading deals could also turn more expensive.

The hike in coal-fired power tariffs is expected to translate into higher energy bills for the SEBs, which buy power from the Central utilities to supplement generation by its own stations, and then supply electricity to the end-consumers. With fuel prices being `pass through' during tariff fixation, the hike in coal prices is most likely to be passed on by most SEBs to consumers. According to officials, State Governments have the option of either passing on the burden to the customers or bearing the increased cost in the form of subsidies to the SEB, when the utility approaches the regulators for tariff fixation.

The burden of coal imports is not likely to ease out in the near future, with power utilities planning to import about 20 MT of coal during the next fiscal - 40 per cent more than this year's import of 14 MT - to meet the deficit in domestic production.