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NEW DELHI, April 12 (Reuters) – India has changed coal
royalties to a flat 14 percent of the pithead price from a
previous 10-14 percent depending partly on the grade of the
commodity, handing its states a bigger share from mining of the
power-producing material.
The change will result in a revenue increase for
coal-bearing states by an average of 17.3 percent, a government
statement said on Thursday, after the cabinet approved the
proposal. A royalty of six percent on lignite was also approved.
Indian states have long complained of being short-changed on
mining of their natural resources such as coal and iron ore,
prompting the government to set up a panel to look into raising
royalties in 2010.
India, the world’s third-largest coal producer, last raised
royalties in 2007. Royalty costs are passed on to consumers such
as power stations and steel plants. Coal India is the country’s
biggest producer, accounting for 80 percent of total production.
“The implementation of above revised rates of royalty on
coal and lignite would provide coal and lignite bearing States
reasonable share of the income earned by mining, production and
selling of these minerals,” the statement said.
Coal accounts for more than half of India’s power generation
and will be required for 85 percent of the 76,000 megawatts
additional capacity targeted in the next five years.
But domestic supply has fallen short of targets and the
country has a power shortfall which at its peak can hit 11
percent with frequent power cuts, especially outside cities.
India, which sits on the world’s fifth-largest coal
reserves, imported about 80 million tonnes of coal for power
last year and that figure could rise to 400 million tonnes in
2030, research consultants Wood Mackenzie said.
(Reporting by Krittivas Mukherjee; Editing by Jo Winterbottom)
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