Seeking to address the coal shortage affecting the power and steel sectors, government has announced a slew of measures for enhancing its availability in the Budget, a development welcomed by Coal India Ltd.

“We welcome the removal of import duty on coal,” Coal India (CIL) Chairman and Managing Director Zohra Chatterji told PTI.

The Coal Ministry is of the view that development would lead to an increase in import of fossil fuel to the country.

While presenting the Budget for 2012-13, Finance Minister Pranab Mukherjee said: “I propose to ease the situation by providing full exemption from basic customs duty and a concessional CVD (Countervailing Duty) of one per cent to steam coal for a period of two years till March 31, 2014.”

On the proposals, Coal Secretary Alok Perti said, “The exemption will result in increase in import of non-coking coal by around one million tonnes as the prices of the dry fuel would come down“.

The coal ministry had pitched for the reduction in the duty and had even written to the Finance Ministry on the same prior to the budget announcement.

Singreni Coll Narsing Rao said the duty exemption would not have much impact on the domestic coal industry.

The government has proposed to remove 5 per cent customs duty on non-coking coal.

According to an official in the state-owned firm, the duty exemption will also result in reducing the demand-supply gap of fossil fuel.

Power sector is one of the main consumers of non-coking coal and nearly two-third of the electricity generation in the country is coal-based.

The power sector is likely to miss the non-coking coal import target of 55 million tonnes (MT) for the current fiscal as companies have imported only 30 MT till December.

At present, the price of non-coking coal is hovering over $110 per metric tonne.

Last fiscal, 45 MT was imported against the target of 50 MT of non-coking coal for the power sector.

Against the overall coal import target of 142 MT this year, the power sector has been given a target of 55 MT, steel sector 30 MT and rest by the sectors like cement, sponge iron among others.

According to the Planning Commission, the demand-supply gap for coal in the ongoing year is likely to touch 142 MT, with domestic availability being only 554 MT against the requirement of 696 MT.

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