Lok Sabha Question No. 2863 (UNSTARRED), answered on 2021-08-05
Subject: Burden on Consumers
Ministry: POWER
Asked by: Asaduddin Owaisi

## GOVERNMENT OF INDIA MINISTRY OF POWER

## LOK SABHA UNSTARRED QUESTION NO.2863 TO BE ANSWERED ON 05.08.2021

## BURDEN ON CONSUMERS

## 2863.  SHRI ASADUDDIN OWAISI:

Will the Minister of POWER be pleased to state:

- (a) whether  coal  based  electricity  consumers  are  paying  high  cost  as  end  users;
- (b) if so, the different taxes being levied on coal from mine to thermal power station and after generation of electricity;
- (c) whether coal which cost 55% to electricity generation is under GST but electricity as end product is not under GST and is levied multiple taxes;
- (d) if so, the details thereof; and
- (e) the  steps  taken  or  being  taken  by  the  Government  to  put  less  burden  on consumers and reduce taxes on coal for power generation?

## A N S W E R

## THE MINISTER OF POWER AND NEW & RENEWABLE ENERGY

(SHRI  R.K. SINGH)

- (a) : Distribution licensees procure power from different sources including coal based generating stations. The end users (i.e. electricity Consumers) pay the retail tariff as  determined  by  respective  State  Commission  depending  upon  the  various  factors wherein  one  of  the  dominant  factors  is  the  average  power  purchase  cost  incurred  by distribution licensee.  The average power purchase cost includes the cost incurred by the distribution companies in purchase of power from all sources including coal if it has Power Purchase Agreement with the Coal based power plant. So, there are no electricity consumers of the distribution licensee who  as such consume electricity only from the coal based power plant.
- (b)  to  (d)  :    Presently,  GST  @5%  and  GST  compensation  cess  @Rs.  400/metric  ton  is applicable  on  coal.  Besides  this,  State  Governments  levy  royalty,  National  Mineral Exploration  Trust  (NMET)  Charge,  District  Mineral  Foundation  (DMF)  Charge  and  some other taxes/levies, which vary from State to State.  The electricity sector is out of the purview of GST. The activities such as supply of electricity and services of transmission or  distribution  of  electricity  by  an  electricity  transmission  or  distribution  utility  are exempt  from  GST.  Many  State  Governments  levy  taxes  and  duties  on  distribution  of electricity at different rates.

(e) : Coal based power plants are obligated to comply with the norms/Notifications issued by MoEF&CC under Environment Protection Act, 1986. Those Notifications, which fall under the category of 'Change in law' by CERC are liable to be pass through in tariff and burden is to be borne by the consumers.

Government of India have taken the following steps to reduce the cost of power generation and resultant reduction in cost of electricity to consumers:

- (i) The Government in May, 2016 allowed flexibility in utilization of domestic coal by State/Central  Gencos  amongst  their  generating  stations  to  reduce  the  cost  of power generation by allocating more coal to their most efficient plants as well as by saving in transportation cost. The States may also transfer their linkage coal to IPPs selected through bidding process and take equivalent power.
- (ii) Rationalization of linkage sources of State/Central Gencos and IPPs with a view to optimize transportation cost has been allowed.
- (iii) The Government  has  introduced the SHAKTI  (Scheme  for  Harnessing and Allocating  Koyala  (Coal)  Transparently  in  India)-2017  Scheme  to  provide  coal linkages  to  the  power  plants  which  do  not  have  linkage,  thus  helping  the generators to get cheaper coal and thereby reduction in cost of generation.
- (iv) A Merit Order Despatch System has been put in place for Inter State Generating Stations under which electricity from more efficient/lower cost plant are despatched first.

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