Government commits to 24 x7 power to all homes in its budget

The Minister of State ( I/C) for Power, Coal & New & Renewable energy , Mr. Piyush Goyal , applauding the Union Budget 2014-15 said that  “This is a transformative budget focusing on policy initiatives and a heavy emphasis has been laid on investment-led growth, which is reminiscent of the Vajpayee-era. The budget addresses immediate concerns of all sections of society – young, old, poor, women, farmers, SCs/STs, backward sections of the society, middle-class, entrepreneurs etc.” While Congratulating the Union Finance Minister Mr.Arun Jaitley for  for delivering this growth-oriented, pragmatic budget , Mr.Goyal said that “ This will truly be an inflection point for India. The FM has taken several strong steps for the revival, rejuvenation and resurgence of the Indian economy and presented a tangible and actionable roadmap to lift crores of people out of poverty, within 5 years. The thrust on skill development, manufacturing, education, clean & renewable energy, infrastructure and healthcare, are particularly heartening to see. Mr. Goyal said that the Finance Minister has reinstated our government’s commitment of 24 x7 power to all homes.

Welcoming the proposals relating to ministries of Power, Coal and New & Renewable Energy Mr. Goyal said, “I am elated at the announcements to encourage new and renewable energy (solar, wind) and development of transmission & distribution. This will go a long way in ensuring 24x7 power to all. Welcome standardization of custom duty on coal – across grades and types – to end disputes immediately. This is the kind of practical solutions one expects from Mr. Arun. Our moves for improving coal quality by supplying crushed and washed coal, ensuring adequate coal supply for already commissioned & would-be commissioned power plants will unlock dead investments. Also welcome steps for incentivizing solar powered water pumps, and setting up of solar parks Rajasthan, Tamil Nadu and Ladakh; and moves for setting up solar plants on banks of canals. We will also set up Green Energy Corridors for evacuation of renewableenergy.” 

Mr.Goyal said that “I completely endorse the Union Budget 2014-15 as a visionary step towards fulfilling the aspirations of all Indians: “Sabka Saath Sabka Vikas”!”

Following are the excerpts of the Finance Minister’s Budget Speech relating to the Power, Coal and New Renewable Energy Sectors.

I) Power Sector:

  • “DEENDAYAL UPADHYAYA GRAM JYOTI YOJANA” for feeder separation  launched to augment power supply to the rural areas and for strengthening  sub-transmission and distribution systems. A sum of Rs. 500 crores has been set aside for this scheme.
  • Rs. 200 crore for power reforms to make Delhi a truly World Class City.
  • Proposal to allocate an initial sum of Rs. 100 crore for preparatory work for a new scheme “Ultra-Modern Super Critical Coal Based Thermal Power Technology” to promote cleaner and more efficient thermal power.

II) Coal Sector:

Coal (Para 117)  

  • Comprehensive measures for enhancing domestic coal production are being put in place;
  • Stringent mechanism - quality control & environmental protection - supply crushed coal & setting up washeries. 
  • The existing impasse in coal sector will be resolved;
  • Exercise to rationalize coal linkages to optimize transport of coal & reduce cost of power underway.
  • Adequate quantity of coal will be provided to power plants commissioned or would be commissioned by March 2015 to unlock dead investments.

Coal Bed Methane (Para 119):

  • Government’s intention to accelerate production and exploitation of Coal Bed Methane reserves
  • Possibility of using modern technology to revive old or closed wells will be explored

III) Indirect Taxes (Rationalisation Para 221):

At present, coal attracts customs duties at different rates. It is proposed to rationalize the duty structure on all non-agglomerated coal at 2.5 percent basic customs duty and 2 percent CVD. Anthracite coal, bituminous coal, coking coal, steam coal and other coal will attract the same duty. This will eliminate assessment disputes, transaction costs associated with testing.

IV) Clean energy Cess (Para 237):

  • Clean Energy Cess is presently levied on coal, peat and lignite for financing & promoting clean energy initiatives and funding research in clean energy.
  • Proposed to expand scope to include financing & promoting clean environment initiatives and research in area of clean environment.
  • To finance additional initiatives, Clean Energy Cess increased from Rs 50 /T to Rs 100 /T

V) Mining (Para 122):

  • Intention to encourage investment in mining sector and promote sustainable mining practices to adequately meet the requirements of industry without sacrificing environmental concerns
  • Current impasse in mining sector, including, iron ore mining, will be resolved expeditiously. Changes, if necessary, in the MMDR Act, 1957 would be introduced to facilitate this

VI) Revision of Royalty Rate (Para 123):

  • There have been requests from State Governments to revise rate of Royalty on minerals.  Royalty can be revised after a period of three years.
  •  Last revision took place in August, 2009.
  • Another revision will be undertaken to ensure greater revenue to the State Governments.

VII) Power (Para 116):

To promote cleaner and more efficient thermal power it has been proposed to allocate an initial sum of Rs 100 crore for preparatory work for a new scheme “Ultra-Modern Super Critical Coal Based Thermal Power Technology.”

(Para 200) Supply of power continues to be a major area of concern for the country. Therefore, instead of annual extensions, I propose to extend the 10 year tax holiday to the undertakings which begin generation, distribution and transmission of power by 31.03.2017. This stability in our policy will help the investors to plan their investments better.

VIII) MNRE :

  • Renewable energy is high priority of the Government.
  • Proposed to take up ultramodern Solar Power Projects in Rajasthan, Tamil Nadu and Laddkh in J&K.  A sum of Rs. 500 Crore allocated
  • Scheme to promote one lakh solar power driven agriculture and water pumps set. A budget of Rs. 400 Crore allocated.
  • One MW solar power parks on the banks of irrigation canals. A sum of Rs. 100 crores allocated.
  • Implementation of Green Energy corridors for evacuation of power from renewable energy projects.
  • Clean energy cess on coal increased from Rs. 50/tonne to Rs. 100/tonne to be utilized for clean energy activities.    

In reaction to the budget, the industry shared their level of satisfaction.

Mr. Anil Chaudhry, Country President and Managing Director, Schneider Electric India expressed that, "The budget has adequately focused on energy, in sync with the new Government’s vision, and announced various measures that will benefit in ensuring sustained growth for the sectors. The reeling power sector will find some respite, if the measures announced in the budget are implemented properly. There are measures accounted to strengthen the entire power value chain. From Rs 100 crore allocation for super critical ultra modern thermal power to the rationalization of coal linkages will facilitate the struggling power producers and put the stranded power plants on a rebound course. The Government’s promise to resolve the existing deadlocks in coal sector and provide fuel to all projects coming up before March 2015 will be a massive thrust to get the flailing sector on course to meet the Government’s 12th Plan target of 88,000 MW.

 
The Budget has adequately focused on the solar energy sector. Rs 500 crore allocation for ultra-modern solar power projects will give the deserving boost to solar companies to increase generation capacity which is currently a mere 1 % of India’s total energy production. Rs 100 crore for the development of 1 MW solar parks on the banks of canals and Rs 400 crore for setting up solar power driven pump sets are some unique measures introduced that will further drive utilization of solar energy and reduce our dependency on conventional energy resources. Implementation of the Green energy Corridor Project will be a great move to integrate channels for evacuation of solar power – a formidable challenge for generating companies at the moment.  The removal of customs and excise duties on solar equipment on the other hand will incentivize indigenous companies to increase domestic manufacturing and reduce reliance on import. These are most welcoming moves.”
 

Mr. Tulsi Tanti CMD Suzlon comments that the budget promotes manufacturing led growth, infrastructure and clean energy. According to him this is a growth oriented and futuristic budget and the big shift in policy initiatives will revive and promote manufacturing thereby paving the way for 7% growth. Key announcements on investments in physical infrastructure development, direct allowances for new investment in Plant & Machinery, FDI, GST implementation and long term financing options are likely to boost manufacturing.

He also lays emphasis on the fact that Wind Energy (clean) has been given a top priority, where:

  • Extending of 10 yr tax holiday for power companies by 31st March, 2017, provides much required predictability for investors investing in power projects. The target of the new government is to provide 24/7 uninterrupted power supply to all homes augurs well for the growth of energy sector in India. 
  • The budget proposal to increase clean energy cess from Rs.50 per ton to Rs.100 per ton for financing and promoting will indeed be a major boost for Wind energy in Investment allowance along with continuation of additional depreciation (Total -60%) is also likely to benefit SMEs who would like to  invest in the wind sector .
  • The FM provided much awaited relief in the form of exempting special additional duty of 4% on parts and materials required for the manufacturing of wind operated generators.
  • Early execution of the Green Energy Corridor Project is also likely to act as catalyst in evacuation of power from wind.
  • All these measures are likely to boost investment in the Wind energy sector which is likely to grow by 50% in 2014-15. 

Mr. Vineet Mittal, Founder President Solar Power Developers ASSOCIATION (SPDA) belives that the overall sentiment in the industry post the budget is very positive; it is a very business-friendly budget.

He further commented that, "We would like to congratulate the Finance Minster on putting together the vision of the new government on the critical sectors of the economy. Our complements for the great road map drawn up for the Renewable Energy industry as a whole and the special thrust for broad basing and up scaling the Solar power sector nationally.

To start with the proposed UMPPs in Rajasthan, Gujarat, Tamil Nadu and Ladakh in J&K with a budget of 500 crores is very encouraging. If the govt ensures issues of evacuation, land and availability of the water is taken care of – there will be a lot of players willing to enter this segment. Another positive move is the govt relaxing requirements of CRR, SLR, priority sector lending, because of this banks are now being able to issue long term bonds as loans for projects as long as 25-30 years!

There is good news for the manufacturers as well especially with regards to concession of duty. A concessional basic customs duty of 5 percent is also being extended to machinery and equipment required for setting up of a project for solar energy production. This will give a shot in the arm for the local manufacturers.

Even the issue on supply of power which was a major area of concern has been addressed – now instead of annual extensions – it has been extended by 3 years.  This will give predictability to the tax implications. This stability in our policy will help the investors to plan their investments better.

An additional budget of Rs. 100 crores has also been set aside for the development of 1MW Solar parks on the banks of canals. Implementation of the green energy corridor project will be accelerated in this financial year to facilitate evacuation of renewable energy across the country. Overall it is a step in the right direction."

 

 

Policies & Regulations | News published on 14/07/2014 by Rashmi Nargundkar

 
 
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