Coal tax hike, cess removal may bring down WBPDCL’s generation cost
Times of India | 5 September 2025
Kolkata: The GST Council's announcements to increase tax from the present 5% to 18% and scrap the Rs 400/tonne compensation cess on coal are likely to have a neutral effect on power tariffs in the state.
However, West Bengal Power Development Corporation Limited (WBPDCL), a state PSU, will benefit as, according to primary calculations, its generation cost may reduce by 8-9 paise/unit.
Currently, a 5% GST is charged on the buying and selling of coal. In addition, a cess of Rs 400 is levied per tonne of coal, which goes to a fund created for compensating states for any revenue loss due to GST implementation since July 1, 2017.
WBPDCL does not buy coal from Coal India but sources the fuel entirely from its five captive mines for power generation, so paying GST doesn't arise.
"WBPDCL, which needs 55,000-60,000 tonnes of coal on a daily basis to generate electricity in its power plants, sourced it entirely from its five captive blocks, namely Barjora, Barjora North, Gangaramchak & Gangaramchak-Bhadulia, Pachchwara and Tara (East & West) for more than a year.
So, the company is completely self-sufficient in coal," an official said.
"A complete withdrawal of cess will translate into an 8-9 paise saving in generation cost per unit for WBPDCL," another official said.
WBPDCL, which has a total installed capacity of 4,250 MW, sells its entire generation to West Bengal State Electricity Distribution Company Limited (WBSEDCL) at close to Rs 4 per unit. If generation cost comes down, whether consumer tariff will be reduced or not is still not clear.
Earlier, on several occasions, WBSEDCL did not pass on the additional cost arising from an increase in coal prices to consumers, which was severely affecting its finances. For CESC, the increase in GST and withdrawal of compensation cess on coal will largely offset each other, so any tariff change is unlikely, a source said.
Currently, the average power tariff in CESC areas is Rs 7.31 per unit and for WBSEDCL consumers it stands at Rs 7.12.