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Assocham pitches for zero import duty on coal, more rail rakes to deal with power supply issues

Association urges States, discoms to not give commercial consumers short shrift in power supply

Industry body Assocham has made a case for duty-free import of coal, greater availability of railway rakes to transport the dry fuel and a different rate of diesel for captive generators for dealing with the power supply issue this summer.

"We would urge States and discoms not to differentiate against commercial consumers in power supply. This is critical because growth in industrial production remains muted despite the overall economic recovery,'' Assocham Secretary General Deepak Sood said in a statement.

Assocham has suggested key measures, including duty-free imports of coal along with increased availability of railway rakes for movement of coal and a differential rate of diesel for captive generator sets for tackling challenges of power supply in several States, amidst unprecedented early onset of heatwave conditions in several parts of the country.

While the Centre has allowed blending of imported coal to the extent of 10% with the domestic coal, global supply constraints and a sharp rise in the prices in the international markets are making it difficult for power generating companies and discoms further in the transmission chain, he added.

"Although the import duty on coal is 2.5% at present, we would urge scrapping the duty for now in view of the pressing situation," he stated.

The association stated that while in the medium to long term, the recently-signed free trade agreement with Australia, the main source of imported coal for India, would help, the issue of adequate coal supply needs to be handled upfront.

"In cases of power cuts by discoms, no extra burden should be imposed on the industrial consumers. Those who have the captive generating capacity should be supplied diesel at differentiated prices," he stated.

Several states were reeling under power shortages with the situation being further affected by extraordinary heatwave conditions setting in quite early this year, he pointed out.

"Rains are still away and we need to manage the situation with constant monitoring, jointly by the Centre, States, and the industry." Assocham has reached out to its members to keep sharing information about the evolving situation, which would, in turn, be shared with the government.

The power reforms initiated by the Centre to improve the financial conditions of discoms should be speeded up, he suggested.

"It is not a question of boosting generation capacity, the viability of the distribution companies has also to be addressed by the Centre and States. However, the Centre has been coming out with several measures in this direction, which need to be implemented with the cooperation of States," Assocham said.