“There will be small increase in power tariff. It will be very marginal increase on unit cost of power depending upon the cost of import of coal,” finance minister Chidambaram said
Electricity tariff across the country will increase by a minimum 15 to 17 paise per unit after the government today allowed power producers to pass on higher cost of imported coal to consumers.
Finance minister P Chidambaram said the Cabinet Committee on Economic Affairs (CCEA) has approved the pass through proposal, which would result increase in power tariff.
“There will be small increase in power tariff. It will be very marginal increase on unit cost of power depending upon the cost of import of coal,” Chidambaram informed the media.
“They (IPPs) 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.
Chidambaram said: “It is better to have power and pay a few paise more or not have power at all. It is better to have our power plants working and producing power or keep them shut down after investing thousands of crores. For every MW today, I think the capital cost is between Rs5-Rs6 crore.”
A coal ministry official said the move would result in higher power tariff to consumers.
“Though the quantum of the coal to be imported has not been worked out but as per estimates if Coal India imports 15% of coal, it would result in increase in electricity tariff by 15 paise to 17 paise per unit,” the official said.
Chidambaram further said the government has initiated measures to augment production and “by first week of July certain other decisions will be taken to open up more coal mines and to produce more coal”.
In the meanwhile, coal imports were necessary, he added.
“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,” he said.
The Cabinet Committee on Economic Affairs (CCEA) has cleared 5% stake sale of Neyveli Lignite through an offer for sale so that the company can meet the SEBI deadline on public shareholding
The government today approved the government’s 5% stake sale in Neyveli Lignite (NLC), which would help garner around Rs466 crore to the exchequer at current market price.
“The Cabinet Committee on Economic Affairs (CCEA) has cleared 5% stake sale of Neyveli Lignite through an offer for sale,” sources said.
Department of Disinvestment (DoD) had moved Cabinet seeking sale of over 7.8 crore shares, or 5%, through an offer for sale (OFS) route in the Tamil Nadu-based miner.
The CCEA had earlier this month deferred a decision of stake sale in NLC.
Tamil Nadu chief minister Jayalalithaa had last month written to prime minister Manmohan Singh, opposing disinvestment in the integrated mining-cum-power generating company.
She had said divestment in the company would lead to labour unrest and disruption of power supply from Neyveli.
The disinvestment department had communicated to the CCEA that there is no other option but to divest the stake in the company as it is the only way to make the company compliant with the minimum public shareholding norm.
The Securities and Exchange Board of India (SEBI) has set a deadline of August 2013 for all listed central public sector units to have a minimum 10% public shareholding.
Jayalalithaa had suggested delisting of Neyveli Lignite or amending the Securities Contracts (Regulation) Rules, 1957, to make a special exemption for the company from the minimum public shareholding rule.
The company said the decision has been taken in view of the government’s “publicly stated objective of minimising gold imports that are seriously hurting the country's economic interests”
Amid growing concerns over huge gold imports hurting the country's economic strength, financial services major Reliance Capital on Friday became the first company to suspend gold sales across all its businesses.
The decision includes suspension of sale of gold coins and other physical forms of the yellow metal, as also as an investment product across all its businesses and subsidiaries, Reliance Capital said in a statement.
Part of Anil Ambani-led Reliance Group, the company said the decision has been taken in view of the government’s “publicly stated objective of minimising gold imports that are seriously hurting the country's economic interests”.
According to industry watchers, more companies are expected to follow suit with similar measures, as rising gold imports continue to burden the country's current account deficit.
The government has been consistently asking for measures to curb flow of household savings into idle assets like gold and channelize these funds towards financial market assets.
Besides suspension of gold sales, Reliance Capital's Commercial Finance Division has also decided to suspend financing against gold as a security.
Further, Reliance Capital Asset Management (RCAM) has decided to suspend new subscriptions in Reliance Gold Savings Fund. Existing SIP investors will not be affected by this decision.
The fund is estimated to have a total Asset Under Management (AUM) of over Rs2,200 crore.
Commenting on the move, Reliance Capital CEO Sam Ghosh said, “Reliance Capital is committed to support all policy objectives of the government and the RBI.
“We sincerely hope that all stakeholders across business, trade and industry will act in a responsible manner to minimise gold imports that have placed an unbearable burden on the Current Account Deficit (CAD), and are severely hurting the country's growth prospects,” he added.
The suspension would also apply to supply of gold coins by Reliance Capital for sale through India Post, the company said.
India is estimated to have imported 860 tonnes of gold in 2012 and the figure is expected to cross 900 tonnes this year.