Hike in coal royalty rates to push up power costs

21 June 2007

Mumbai: Both domestic and industrial consumers will have to shell out more money for electricity following a hefty 14 per cent hike in the royalty that states charge on coal, the major input for power generation.

The cabinet committee on economic affairs approved the revision of royalty rates on coal and lignite through an amendment to the second schedule of the Mines and Minerals (Development and Regulation) Act, 1957 through a Gazette notification.

The weighted average royalty payable after revision excluding West Bengal as a percentage of weighted coal price (based on 2004-05 production level) works out to about 14 per cent.

This will give the coal producing states a reasonable share of the income earned by production and selling of a non-renewable mineral resource like coal and lignite.

Finance minister P Chidambaram said the increase in revenue for the states, barring West Bengal, will be 24 per cent for coal and 27 per cent for lignite.

"The revenues of the coal-producing states would increase to Rs3,718 crore from the current Rs3,000 crore," he said.