The change in GST rules by the Union govt will make electricity cheaper by at least 20 paise per unit for 1.77 crore consumers in Madhya Pradesh, resulting in a drop of at least Rs 60 in monthly bills for those using 300 units of energy. However, contrary to the Centre’s intention of passing on the benefit immediately, consumers are likely to see the effect only after three months — from Dec onwards.
Electricity prices are set to fall despite GST on coal being raised from 5% to 15%. This is because, under GST 2.0, the govt has scrapped the compensation cess of Rs 400 per ton of coal that was levied earlier. Even with the GST hike, overall prices will drop. A reduction of 20 paise per unit translates into savings of around Rs 160 crore per month, or nearly Rs 1,920 crore annually.
Director of MP Power Generating Company Limited—the state-owned power generator—said, “The move by the Union govt will definitely bring coal prices down. Consumers will benefit. It’s a big step.” He explained that coal used by the company generally costs between Rs 500–600 per ton and up to Rs 4,000 per ton for higher grades. “Even if coal is priced at Rs 3,000 per ton, the increase due to higher GST will be about Rs 390, but the cess removal brings it down by Rs 400 per ton—resulting in a net decrease,” he said.
As per Coal India’s price notification effective April 4, G-16 grade coal is priced at Rs 524 per ton. Experts point out that if a slightly better quality like G-13 coal (Rs 837 per ton) is used, the cost of power generation per unit would reduce by about 22 paise.
Retired additional chief engineer of MP Genco, explained: “At current rates, G-13 coal works out to Rs 1,278 per ton, but under the new GST structure it will cost Rs 987.66 per ton, a drop of Rs 291.19. Since about 750 grams of coal is needed to generate one unit of electricity, this translates into a saving of around 22 paise per unit.”
He, however, noted that the benefit would not be immediate. “Although the Centre wants consumers to start celebrating from Sept 22, the relief will show up only after three months. The govt should take steps to pass on the benefit sooner,” he said.
Discom officials said the reduction would be reflected in the Fuel and Power Purchase Adjustment Surcharge (FPPAS), levied monthly on consumers’ bills. “For instance, if coal prices drop in Oct, it will reflect in the Dec FPPAS, since the calculation is based on the cost of power purchased two months earlier,” a discom official said.
On the issue of passing the benefits immediately to the consumers, state energy minister Pradyumn Singh Tomar told TOI, “We will look into the issue, consider all aspects, and then see what can be done.”
Sources from the discom said that the overall impact could be significant, as discoms buy about 800 crore units of power every month. Even a 20-paise reduction per unit means a saving of around Rs 160 crore monthly.
Source #TOI
