Centre wants West Bengal to cut cess on coal, hike royalty

KOLKATA: The central government wants West Bengal to reduce the cess on coal and increase the royalty to 14 per cent, which will be in line with the practice at other states producing the dry fuel.

At present, Bengal levies a cess of 25 per cent on each tonne of coal and earns around Rs 900 crore a year. Royalty varies from Rs 3.50 to Rs 6.50 a tonne, depending on the grade of coal.

In other states, royalty is 14 per cent for all grades, while cess is negligible. In a meeting attended by Union Coal Minister Piyush Goyal, West Bengal Power Minister Sovandeb Chatterjee and the adviser to the state’s power ministry, Manish Gupta, Goyal suggested that West Bengal set up a five-member committee to look into the issues of high cess charged by it.

"The proposed committee will be formed under the chairmanship of the state power secretary and include directors from Coal India. It will submit its report in four weeks," Goyal said after the meeting.

The committee should look into the positives and negatives of high cess and low royalty system, he said. "If 14 per cent royalty, as imposed by other states, is applied to West Bengal, I think the state will benefit as coal production rises. Overall revenue will rise and not fall. Power costs too will come down."

The West Bengal power department called Goyal's statement an "encroachment in the state's domain", echoing Chief Minister Mamata Banerjee’s accusation that the Centre is bulldozing the federal structure.

"Let the committee study and we will present our viewpoints on the subject," Minister Chatterjee said.