Manmohan to consider Coal Panel's Suggestions on Duty Cut.

Faced with a serious shortage of coal that has led to continuing power crisis in the country, Prime Minister Manmohan Singh on Monday will consider the Chaturvedi Committee report that has suggested exempting imported coal from the 5 per cent customs and 5 per cent countervailing duty (CVD).

He has convened a meeting of Power, Coal, Environment and Forests Ministries to deal with the situation.

In the last few months, the country had been facing coal shortage due to fall in domestic production. Import too has gone down dramatically due to a sharp rise in the cost as countries such as Indonesia and Australia have imposed additional duties, taking the price from $30 a tonne to $150.

The government had set up committee headed by Planning Commission member (Energy) B.K. Chaturvedi to suggest measures to increase coal production and increase its availability to meet the growing needs of the power sector.The Hindu has a copy of the report.

The report recommended that domestic prices be fixed at 10 per cent higher rates and this amount be shared with plants having linkages with Coal India Limited in a pro-rata manner of total imports of the plant and on calories a kg basis of imported coal. “It will very substantially compensate high import prices of coal if imports are up to 10 per cent. Above this, it will only partly compensate the higher costs,” it said.

The committee noted that sudden changes in the Australian and Indonesian coal block policies had impacted the ultra mega power projects and other plants to the extent of 15,000 MW. The changes made the power purchase agreements (PPAs) unworkable for the power producers who had signed agreements with the State governments. A committee of experts should be appointed to suggest policy changes in the light of the changed international scene and obligations of parties under the PPA.

“The objective should be to take decisions in the best interests of the growth of the power sector. Since PPAs have been signed by the State governments, leave it to them to resolve these issues and keep hands-off approach as these PPAs provide for changes in any provisions of the contract by mutual agreement with regulator's approval,” the committee said.

Source : thehindu.com