Proposed 5 pc Duty On Coal To Impact Power Tariff: Assocham.

Fearing the proposed 5 per cent countervailing duty (CVD) on coal would shoot power tariff, industry body Assocham today urged government not to levy it.

Nearly two-third of power generation in the country is coal based and any such step would lead to an increase in power tariff by 13 paise per unit, it said.

"A further imposition of countervailing duty at 5 per cent will not only make imported coal-based power plants unviable, but also lead to a steep rise in power tariff," Assocham Secretary General D S Rawat said in a letter to Finance Minister Pranab Mukherjee .

Countervailing duty (CVD), also known as anti-subsidy duty, is an import duty imposed to neutralise the negative effects of subsidies. At present there is a 5 per cent custom duty on non-coking coal.

The price of coal in global markets has already shot up by about 35 per cent, Rawat said, adding, inadequacy of the fossil fuel has already prompted Coal India to formally execute linkages with provision that 50 to 75 per cent of the requirement will be imported.

Coal India accounts for over 82 per cent of the domestic production.

India's ambitious programme of adding to its power generating capacity relies heavily on coal as a source of fuel, Assocham said adding with the economy growing at over eight per cent a year, enhancing fuel security is of paramount importance.

During 2010-11, India imported 83 million tonnes (MT) of coal and in the current fiscal it is likely to go up to 142 MT.

Against a widening demand-supply gap, while the domestic production is expected to rise to 554 MT this fiscal from 542 MT an year ago, the demand is expected to increase to 696 MT from 625 MT.

Source : economictimes.indiatimes.com