Coal India fuels green cess hope

Calcutta, Aug. 17: The Centre expects to collect Rs 23,944.4 crore from Coal India subsidiaries in the current fiscal as clean environment cess.

The levy on coal, lignite and peat came into effect from August 2010, and the budget this year has doubled it to Rs 400 per tonne from Rs 200 per tonne.

Coal India will account for bulk of the budgeted cess amount of Rs 26,148.20 crore. Till June, around Rs 5,500 crore has been collected overall.

Coal India has estimated a production of 598.61 million tonnes in 2016-17. If the actual output is close to the target, the Centre would be able to garner an amount close to its estimate.

Around 28 per cent of Coal India's target production is expected to come from the Mahanadi Coalfields Ltd.

"MCL (Mahanadi) may have to collect the bulk amount of the cess from consumers as its production target is higher among the subsidiaries," said a senior CIL official.

The subsidiary has set a target of 167 million tonnes this fiscal and is expected to collect Rs 6,680 crore as environment cess.

However, the cess will not have any impact on the revenue or cost of production of Coal India.

"Basically, the clean environment cess is being collected from the customers and deposited with the Government of India," the Coal India official said.

Consumers, however, have expressed their concern over the inflationary impact and wants the Centre to judiciously use the collected amount.

"The doubling of clean energy cess in the Union budget is having an inflationary impact on coal consumers in various sectors. In addition, Coal India has increased prices across grades by around 6.3 per cent earlier this year, which is also a pinch in the pocket for industries relying on the company," said an industry source from eastern India.

Further, there were discussions of whether the green levy could be extended to petcoke on account of its high sulphur content.

"At the moment, the matter is under discussion. But petcoke consumers are not in favour of the move," the source said.

"Since the amount of collection this year will be significantly higher over last year on account of the hike in the cess, the Centre must put the collection to judicious use," he added.

Clean environment cess is used to finance and promote clean energy initiatives and research in the sector.

The accruals of the cess are managed by the National Clean Energy Fund (NCEF), which is under the department of expenditure.

Allaying industry fears, government sources said an inter-ministerial group under the expenditure secretary considers all the proposals for funding under the NCEF.