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Tuesday, December 6, 2011

As coal prices surge, Power Ministry seeks scrapping of import duty

Coal from Australia, Indonesia get more expensive

Tuesday, Dec6, 2011

The Power Ministry is pushing for abolition of Customs duty on imported coal.

The Ministry, senior officials said, is trying to garner the support of the Planning Commission on the issue, which is expected to be countered by the Finance Ministry in light of the revenue implications.

On Tuesday, speaking at an industry conference, the Power Minister, Mr Sushilkumar Shinde, hinted at the measures being considered following the increase in imported coal prices.

“The Government will initiate some corrective measures to reduce the burden on the consumers resulting from the increased price of imported coal,” he said.

Power project developers setting up units that are to run on imported coal, including two upcoming Ultra Mega Power Projects (UMPP), have raised concerns about the hike in prices of imported coal from countries such as Indonesia and Australia.

Currently, a five per cent basic Customs duty is levied on imported coal. Key coal exporting countries such as Indonesia and Australia have changed their coal pricing methodology in recent months, leading to international coal prices skyrocketing.
Seeking legal opinion

Responding to a query on the legal issues related to the pit-head-based Sasan UMPP, where the issue of diversion of coal to other projects by the developer had forced the Ministry to seek the Attorney-General's opinion, Mr Shinde said: “Some problems have come up; we pointed them out to the Empowered Group of Ministers (eGoM)... On that, we are seeking legal opinion.”

In a meeting late last night, the eGoM, headed by the Finance Minister Mr Pranab Mukherjee, had asked the Power Ministry to seek the Attorney-General's opinion on the 4,000-MW Sasan UMPP.

The panel is also believed to have discussed the progress of the Mundra UMPP in Gujarat, Krishnapatnam UMPP (Andhra Pradesh) and the Tilaiya UMPP in Jharkhand.

Keywords: Power Ministry, coal import duty, Planning Commission, Mundra UMPP, Krishnapatnam UMPP, customs duty on import coal,

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