Raising coal royalty may affect power tariff: coal secretary

Union Coal Secretary Sumanta Choudhuri Friday said the Centre has to think seriously before deciding on the demand to raise the rate of coal royalty.

Coal bearing states like Odisha are demanding that the Centre increase the royalty on the fuel.

"We have to keep in mind that coal is mostly used as a raw material in thermal power plants across the country. In case the price of coal increases due to revision of royalty, the power tariff may have to be enhanced," Choudhuri told reporters after a meeting with Odisha Chief Secretary AK Tripathy.

There should be a balance between the coal royalty revision and power tariff, Choudhuri said.

Tripathy had earlier said Odisha has been losing a sizable amount of revenue due to delay in revision of the coal royalty. The coal royalty was last revised in 2012.

According to the existing provisions of the MMDR (amendment) Act, the Centre should revise coal royalty in every three years. Therefore, it should have been done in 2015, a senior official said.

Odisha gets around Rs 1,100 to Rs 1,400 crore per annum from coal royalty and Odisha has taken up the issue of royalty revision with the Centre on several occasions in the past.

In March this year, Chief Minister Naveen Patnaik had asked the Centre to revise the rate of royalty on coal from the present 14 per cent to 20 per cent.

While the rate of royalty on coal has remained unchanged for the last seven years, the rate of clean energy cess levied on coal by the Centre was raised from Rs 50 per tonne to Rs 400 per tonne during this period, Patnaik had argued.

The state government has also been demanding a share of at least 60 per cent of clean energy cess to deal with negative externalities of coal mining.

Later in a review meeting, Choudhuri asked the department and agencies concerned to expedite coal production.

In another stakeholder consultation meeting, he urged coal producers to operationalise their mines within two years from the date of allocation.