Calcutta, Feb. 26: Coal prices are set to rise following the budget proposal made by finance minister Pranab Mukherjee, potentially pushing up prices of power, steel, cement and many other key commodities.
Mukherjee today ratified a coal ministry move to auction coal blocks for captive use that would ensure more transparency and speed up the allotment process but effectively increase cost.
The finance minister has proposed a levy of Rs 50 per tonne on coal produced in India and imported to the country.
The money will be used to build the corpus of the National Clean Energy Fund to harness renewable energy sources, which will reduce dependence on fossil fuels and combat global warming and climate change.
The move is, however, likely to push up prices as user industries will have to pay top dollar to get coal blocks and they would pass on a major part of the cost to users.
Coal is the mainstay of the country’s energy sector and 75 per cent of the power generation are currently coal-based.
So far, the energy firms either got coal blocks through a nomination basis or procured the raw material from state-owned producer Coal India Limited at a subsidised rate.
In the case of imported coal, the unit cost of power goes up because prices are linked to the market. This may now hold true for domestic coal as well.