Man will soon think of going back to the life of early Stone Age owing to the growth of expensive commodities every day due to one or the other reason. It was just a day back when shocking news of fall in rupee against dollar came in the headlines which increased the prices of commodities of daily needs.
People were not even able to completely absorb this shock when they will be facing another shock from the news about possibilities of increase in power tariff by the government. As on Friday, June 21, 2013, the Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of Coal India Limited (CIL) to allow a pass through to supply imported coals to the Thermal Power Plants (TPPs) at a high cost in order to fulfill their requirements.
After the plans got cleared by the Cabinet Panel on Economic Affairs, the Finance Minister P Chidambaram said, “We can’t today estimate what will be the increase in cost of power and certainly it will not be uniform. It will depend upon power plant to power plant and where it is located.” “It is better to have power and pay a few paise more than not have power at all. It is better to have our power plants working and producing power than keep them shut down after investing thousands of crores. For every MW today, I think the capital cost is between Rs 5-6 crore,” he further added.
However, the power tariffs will not be affected much if there is a supply of around 65-75% of coal to the TPPs by the CIL. This will help the power generators to safely lower their plant load factor and operate the units at about 75-80% of the capacity. Thus they would require importing only 5% – 10% of coal which will therefore not increase much of tariff rates.
According to the industry players, if the generators would like to run their plants at 100%, they will have to import around 15% of coal which could thus increase the power tariff by 15-17 paise. “But no one has to, or does run their plant, at 100% capacity,” said a power company executive.
Chidambaram said the government has initiated measures to augment coal production and “by the first week of July, certain other decisions will be taken to open up more coal mines and to produce more coal”. “In the interim period, there is no option but to import some coal. Imported coal is costlier than domestic coal. We are guaranteeing 65% this year to 75% by the end of 12th plan (by Coal India) for each of these 78,000 mw capacity,” the FM said. “They (power producers) can import coal themselves if they wish, otherwise Coal India will import and this additional price which we pay for imported coal, obviously, has to be pass through in the power tariff,” he added.