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Railways to levy coal terminal surcharge

Power companies worried over railway's decision to put tax on the terminal surcharge

Policy Pulse
Publish Date: Oct 3 2016 11:02AM | Updated Date: Oct 3 2016 4:37PM

Railways to levy coal terminal surcharge

Railways’ decision to levy coal terminal surcharge left the power companies worried. Railways decided to put tax at both loading and unloading ends for power companies located beyond 100 km of coal mines.

 

Power generation costs after this decision goes up by 8 paisa per unit.  “A large number of private companies are located beyond 100 kms of coal mines and it has increased their power generation costs too, at a time when power is surplus,” said Ashok Khurana of Association of Power Producers. 

 

The decision has hit private power players more than state-owned generators, power producers said. Experts say only 15% of this increased cost can be passed on to consumers, while the rest has to be absorbed by companies. The levy would further pressurize their margins. 

 

Power companies moving coal over 150 km are incurring Rs 110 per tonne rise in coal transportation costs, said Jayanta Roy, senior vice president at ICRA, as reported in Economic Times.

 

For a 1,000 mw power plant operating at 80% capacity utilisation, input costs would go up by about Rs 55 crore a year. They would be incurring an additional Rs 200 per tonne, including VAT and duties. 

 

Industry analysts say majority of thermal power plants of the central generating companies’ are located at distances less than 100 km.

 

A large number of these plants either have their own conveyor belts and rail links or they transport the coal on trucks for such short distances. 

 

Adani’s plants in Tiroda and Kawai, GMR’s plants inWarora and Chattisgarh, Hinduja Power’s plant and Reliance Power’s Rosa plant are all located beyond 100 km of coal mines.