In the coming fiscal, electricity rates are bound to go up with the current policy environment pushing up prices of coal, the principal fuel for power generation in India, a senior NTPC official said.

It is not only coal, but an increase in domestically produced gas price is also in offing. This would mean power generation costs will go up. In the power sector, the increases in fuel prices are passed through to the consumer.

The Budget 2014-15 proposals — increased cess on coal, rationalisation of import duties and the pending increase in mining royalties for States — will increase coal prices.

“So electricity prices are bound to go up once royalty rates are finalised,” the official told BusinessLine , adding that “people would be ready to pay increased tariffs if there is reliability of power supply.”

Making a reference to the recent CERC order, the official said, at present, it is the producer who is being squeezed to offset tariff increase at the consumer end. NTPC remained non-committal on the Commission’s order, stating that the matter is sub-judice .

Finance Minister Arun Jaitley has proposed to double the Clean Energy Cess on coal to ₹100 a tonne from the existing ₹50/tonne. Jaitley also rationalised coal import duty for all types of the fuel to 2.5 per cent basic Customs duty and 2 per cent CVD (Countervailing Duty).

Cost of imports

Besides, there is also cost of imported coal. To meet its fuel requirement, NTPC has also been importing coal. Last fiscal, NTPC sourced 150 million tonne of fuel from Coal India and its subsidiary, and imported 10 million tonne.

This fiscal also it expected to import 10-12 million tonnes of coal. The imports are also set to increase power generation costs. The power producer’s fuel bill had increased 11.5 per cent in fiscal 2013-14 to ₹47,790 crore as against ₹42,827 crore in the previous fiscal.

Meanwhile, NTPC’s Chairman and Managing Director Arup Roy Choudhury called for a coal regulator to be set up.

Call for regulator

“Coal regulator should come as there needs to be a transparency in coal pricing,” he said, adding that “if there is a power sector regulator then there should a coal regulator also.”

As on March 31, 2014, NTPC had a total installed capacity of 43,019 MW, which includes plants owned by joint venture companies. Of the total capacity, over 75 per cent are coal-based power plants while the remaining is gas-based.

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