New Delhi: India Inc Friday termed the government's decision to allow power producers to pass on higher cost of imported coal to consumers a step in the right direction and said it would increase the availability of power in the country.
"It is a step in a right direction as it will help to mitigate the problem of coal shortage. It will also make the unviable power projects viable and will help in boosting infrastructure and industrial growth of the country," Former Ficci President R V Kanoria said.
Sharing similar views, Assocham Secretary General D S Rawat said that there was a huge power shortage in the country and about 30,000 MW of stalled capacity is idle due to coal shortage.
"We welcome the Cabinet's decision in this regards," Rawat said.
However, Kanoria said that the government should not encourage re-negotiation of contracts.
"It is not a good thing to do," he added.
The pass through mechanism will be applicable for nearly 78,000 MW of thermal stations commissioned after 2009.
Under the proposed pass-through mechanism, the entire additional cost of imports would be passed on to the consumers as against the averaging of prices of imported and domestic coal under the earlier planned price-pooling mechanism.
Electricity tariff across the country will increase by a minimum 15 to 17 paise per unit after the government's decision to permit power producers to pass on higher cost of imported coal to consumers.
Finance Minister P Chidambaram said the Cabinet Committee on Economic Affairs has approved the pass through proposal, which would result increase in power tariff.
First Published: Friday, June 21, 2013, 23:37