Budget 2014: Power sector gets electrified with Budget measures. Section 80IA extended to March 2017

Experts, industry and investors welcomed measures announced by Finance Minister Arun Jaitley for the power sector, especially renewable energy. In his maiden budget, Jaitley laid stress on solar and wind energy, besides extending tax benefits for thermal power project developers.

According to Kameswara Rao, Leader for energy & utilities mining at PwC India, the proposals presage a positive direction to enhance energy security through renewable sources, with both large-scale projects and distributed projects and transmission lines connecting green energy corridors to load centres.

Jaitley proposed to set aside Rs 500 crore for feeder separation to augment power supply in rural areas and to strengthen sub-transmission and distributions systems. Utilities that start generation, transmission and distribution of power by March 31, 2017, will get a 10-year tax holiday.

“The proposals for feeder segregation and distributed solar generation will improve availability and quality of power supply in rural areas. The resources required for this, however, are far larger than budgeted, and this initial allocation should be used to attract domestic and multilateral funds. Extension of the 10-year tax holiday to 2017 should encourage new investments especially private sector, across all segments of generation, transmission, and distribution,” said Rao.

He added that the proposal to channel coal supply to projects commissioned by financial year end is positive given the limitations in increasing output of the fuel in the short term. According to Rao, this should help generating thermal projects improve viability and add to power supply.

The government plans to allocate Rs 500 crore for ultra mega solar power projects in Rajasthan, Gujarat, Tamil Nadu and Ladakh. It proposes a sum of Rs 400 crore to launch a scheme for solar power-driven agricultural pump-sets and water pumping stations to energise 1 lakh pumps.

“Announcements of mega solar plants in Rajasthan, Tamil Nadu and Ladakh will benefit the industry. Solar irrigation pump is a very relevant segment from the rural, agriculture, power subsidy and diesel consumption perspective,” Moser Baer Solar chief marketing officer Vivek Chaturvedi told ET.

“Focused approach and implementation in this segment alone is a Rs 6,000 crore opportunity in the short run for the 1 lakh pump announcement. Bringing down duties on photovoltaic manufacturing equipment is another important step in the direction of bringing costs down to drive local manufacturing and job creation,” Chaturvedi said.

He added that the finance minister has done well to double the coal cess to Rs 100 a tonne to augment resources for the National Clean Energy Fund for green initiatives.

Solar power equipment makers feel that doing away with inverted duty structure will drive the competitiveness of local manufacturers and lower costs of solar power in India.

Bangalore-based think-tank Global Initiative for Restructuring Environment and Management president Shyam Sundar S Pani said the government’s thrust on solar power is welcome.

“There are numerous solar projects in the country that are in limbo or waiting for a ramp-up due to shortage of funds. Solar power projects would immensely benefit if undertaken on the PPP mode. A fund of Rs 500 crore is good amount to start with. In addition to this, tax incentives on solar panels will definitely infuse vigour in the sector that has been given a short shrift so far,” he said.

Source: ET

About Ritesh Pothan

Ritesh Pothan, is an accomplished speaker and visionary in the Solar Energy space in India. Ritesh is from an Engineering Background with a Master’s Degree in Technology and had spent more than a decade as the Infrastructure Head for a public limited company with the last 9 years dedicated to Solar and Renewable Energy. He also runs the 2 largest India focused renewable energy groups on LinkedIn - Solar - India and Renewables - India
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