GST & coal cess changes to lower power tariffs: CERC
The Central Electricity Regulatory Commission (CERC) has said that the statutory changes in the Goods and Services Tax (GST) and the coal compensation cess fall under the ambit of a ‘change in law’ event, and their impact will be adjusted or refunded to distribution companies.
The government had removed the Rs.400/tonne compensation cess on coal and revised the GST rate from 5% to 18%. The cost impact of these changes varies by coal grade. According to the government, coal grades G6 to G17 will see reductions ranging from Rs.13.40 to Rs.329.61 per tonne.
For the power sector, the average reduction is about Rs.260 per tonne, translating into a cut of 17–18 paise per unit in the cost of generation, the coal ministry said on September 22.
“The move is very progressive being prompt action by a regulator which will help in ensuring cost reflective tariff adjustment on real-time basis" said Amit Kapur, Partner with law firm JSA.
