New Delhi: Chhattisgarh’s request for a revision in royalty rates on coal to 30 per cent from the existing 14 per cent ad-valorem, will push up the cost of electricity by 7 per cent or 10-12paisa/kWh, India Ratings today said in a report.

The state government has constituted a study group to consider the revision in the royalty rates based on the request.

“Ind-Ra believes the royalty hike looks quite steep at 30 per cent, and if accepted, it will lead to coal attracting the highest ad-valorem duty compared to all other minerals,” the report said.

Assuming a pithead price of Rs 720 per tonne for coal, the royalty increase will also lead to a higher contribution towards district mineral foundation (DMF) at 30 per cent of royalty and National Mineral and Exploration Trust (NMET) at 2 per cent of royalty, which translates into a higher cost of electricity generation by 10-12paisa/kWh.Read More