Panel Pulls up Govt. for Diverting Coal Cess

Prelims level : Economy Mains level : Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
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In News:

  • The 42nd standing committee on energy in its report on stressed gas-based power plants tabled in Parliament January 2019 has pulled up the government for diverting coal cess to compensate States for revenue loss post-GST, and recommended financial support to the stressed gas-based power projects in the country from National Clean Energy Fund (NCEF).

What is NCEF (National Clean Energy Fund)?

  • The NCEF was created out of cess on coal at Rs. 400 per tonne to provide financial support to clean energy initiatives and an Inter-Ministerial Group chaired by the Finance Secretary was constituted to approve the project/schemes eligible for financing under NCEF. The Fund is designed as a non-lapsable fund under Public Accounts and with its secretariat in Plan Finance II Division, Department of Expenditure, Ministry of Finance.


  • The coal cess collected from 2010-11 to 2017-18 amounts to Rs. 86,440.21 crore, out of which only Rs. 29,645.29 crore has actually been transferred to the NCEF. The amount financed from NCEF for projects is only Rs. 15,911.49 crore, or only about 18% of the total amount collected as coal cess.
  • The Committee stated in its report that the fund should be used for its intended purpose i.e. to support clean energy initiatives and it should not be diverted to compensate GST losses.
  • According to report, diversion of this fund to unrelated activities reflects poorly on our commitment towards cleaner environment and shows government’s apathy towards clean energy projects. Since it is levied on coal as that is a polluting fuel, the amount collected should be used to promote cleaner fuel.
  • It also recommended that financial support be extended to gas-based power projects from the NCEF.

Scenario in gas-based power plant:

  • Out of India’s total installed capacity of about 345 GW of power, gas-based capacity is about 25 GW or 7.2% of the total. However, its share in terms of generation is only 3.8% as 14,305.30 MW of gas-based capacity is stranded due to non-availability of domestic gas and unaffordability of imported gas. The consequence is that a large amount of assets in this sector have turned ‘non-performing’ or ‘unproductive’It is high time to understand the real benefits of gas-based projects which can be used as peak-based plants as also for ancillary services. As demand for energy is picking up due to government’s efforts in electrifying all households, revival of gas-based plants will help provide clean energy.”
  • The revival will also help all these plants service outstanding debt of Rs. 50,000 crores with banks
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