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Light at the end of the tunnel for Indian power tariffs

India is slowly starting to see some “green shoots” as far as tariffs are concerned, said Ahmed Buhari, the chief executive of Coal & Oil Group at the 33rd Coaltrans World Coal Conference in Berlin.

Low Indian power tariffs were the biggest issue that could potentially hold back the nation’s thermal coal demand growth, according to the majority of delegates polled at the conference.

The next most pressing problem for the delegates was the historical lack of investment in power capacity infrastructure, followed by the recent depreciation of rupee and the low cost of domestic coal production compared to imported coal.

 “If you see some of the recent tariff increases in India at least half a dozen states have increased their power tariffs,” Mr Buhari, a panellist at the conference, told delegates.

“It's finally dawned on the regulator that we need to have reasonable tariffs for generation to make sense so we’re definitely seeing a scenario where the tariffs are slowly going up.”

The tariffs are going up despite it not being a very popular decision in an election year, added Mr Buhari.

“If one has to look at increasing the tariffs so that it will suit coal imports I don’t think it’s a very popular decision as far as political classes are concerned,” he said.

“We have elections in India in 2014 and a lot of expectations on the elections and top of the agenda for whichever new government that comes in is the electricity sector. Obviously if you don’t have a robust power sector then you don’t have a robust coal sector and you don’t have a robust economy.”

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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