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State-run NTPC, which accounts for 17 per cent of all generation capacity in the country and is the key supplier to states, reduced its coal consumption by 5.5 per cent in 2016-17.
NTPC's coal cost stood at Rs 2 per unit in 2014-15 and should have risen by 33 paise due to revisions in coal price, government cess and railway freight. Remarkably though, it stood at Rs 1.94 per unit for 2016-17.
In other words, even after paying 33 paise more since 2014-15, NTPC's power costs 6 paise less today. For discoms then, this actually means a saving of 39 paise per unit, taking into account the impact of the revisions, and translates into hundreds of crores of rupees. Lower cost of power ultimately benefits consumers by way of lower tariff.
That happens only in an ideal situation. In reality, discoms coping with sagging bottomlines and commercial losses may not be able to reduce monthly bills of consumers immediately.
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