Perspective Mr. Animesh Damani, Partner, Artha Energy Resources The power sector has set high expectations from this year’s
agenda towards renewables and stance of Discoms on anti-renewable needs to be
budget and are hopeful of seeing power being included in the
addressed.”
15 per cent tax bracket. It has been a long-standing demand
There is a need for captive renewable energy policy as consumers, who are supporting
of the industry for reduction in GST rates as there is no input
the government’s agenda on renewables are facing resistance from Discoms. Recently,
credit that can be claimed by power companies.
Maharashtra proposed adding grid-support charges for net-metered consumers
“I strongly believe that subsidies for the residential sector need to be tweaked as
ranging from Rs 4 to Rs 8 per unit. As a result, such charges are refraining consumers
they are not giving desired results. A bigger focus on incentivizing commercial and
from following the government’s agenda and dithering new consumers from installing
industrial users is the need of the hour. We are hopeful of seeing a new version of Ujwal
projects.
DISCOM Assurance Yojana (UDAY) in this budget with a greater focus on compliance
There is a lack of clarity on various charges, a process for setting up captive open
from Discoms towards timely payment to generators and reduction in their own losses.
access plants amongst other issues that need to be addressed. Visibility for a 10-year
A move to shift subsides from discoms to the state budget will be a much-appreciated
horizon on applicable charges is extremely important as such projects involve high
move.”
capital expenditure.
Animesh Damani is of the view that the budget alone cannot propel the growth of the
Damani vouches for exemptions from cross-subsidy and transmission charges, as it
solar industry and it needs sector specific reforms to resolve issues the way SERCs,
makes projects viable and consumers do not have to bear the burden of additional
CERCs and utilities work. “The gap in the implementation of central government’s
charges.
Mr. Rohit Chandak, Chief Financial Officer, Ayana Power Our key expectation from the budget is as follows: 1. Revive bank loan market: Renewable Energy (RE) sector needs steady support of banks. Whether by including renewable energy in the priority sector or other incentives, banks must be encouraged to provide long-term debt to RE projects. Unless the banks actively participate in funding of these projects, it will not be possible to achieve the ambitious target for RE in India. The non-availability of bank finance for under construction RE projects is already reflecting in poor subscription for various on-going tenders. 2. Focus on DISCOM health: Poor health of state DISCOM is a key concern for the entire power sector. No business can survive if a Government-owned counter party doesn’t pay for undisputed invoices for more than a year. A well thought plan to improve health on a long term basis, rather than temporary liquidity support is needed for the hour. While there have various initiatives like UDAY in this regard, the structural issue of negative unit economics (revenue realization being lesser than average cost of supply) is the key to solving this issue on a sustainable basis. 3. Sanctity of Contract: Infrastructure business derive their value from the expectation
A well thought plan to improve health on a long term basis, rather than temporary liquidity support is needed for the hour. While there have various initiatives like UDAY in this regard, the structural issue of negative unit economics (revenue realization being lesser than average cost of supply) is the key to solving this issue on a sustainable basis.
that the Government-owned counter parties will honour the contract in letter and spirit over 20-30 years life span. Any attempt, action or display of an intention to not honour signed contracts can impact foreign investment significantly. Adequate laws or legal protection must be provided against the same. 4. Corporate Tax: Provide express clarification that renewable energy projects are eligible for 15% tax rate as provided for manufacturing.
6. Cash Trap: Mostly infrastructure businesses are housed in different SPVs and suffer from cash trap once the projects start generating operating cash flows. Adequate relaxation from deemed dividend and interest disallowance provisions to allow movement of surplus cash as inter-company deposits must be allowed.
5. GST Off-set: There is heavy accumulated GST input-credit for renewable energy
There is a significant number of foreign investors willing to invest in the renewable energy
projects that goes completely unutilised by the project SPVs as power sale is exempt
sector in India. However, some of the fundamental issues need immediate attention and
from GST. Renewable SPVs shall either be allowed to procure at nil GST or be allowed
we hope that Budget 2020 will address many of the highlighted issues.
to claim refund under inverted duty refund structure.
Ms. Vibhuti Garg, Energy Economist, Institute for Energy Economics and Financial Analysis (IEEFA) Technology is shaping the future of energy mix and to meet its
Government should provide financial support to new technologies like off-shore wind etc.
climate commitment as part of the Paris agreement, the budget
and also exploit the potential of solar rooftop and other decentralized renewable energy
needs to give a strong push to clean fuels. While renewable
like solar pumps for agriculture by waiver of transmission charges, cross-subsidy surcharge
energy has become price competitive with conventional fuels,
on such consumers.
policy certainty to be ensured and negative impact on the price
Given the increasing issue of air pollution, it becomes imperative for the Government
of renewable energy by imposition of duties and charges to be avoided.
to provide support for meeting the environmental norms by thermal power plants.
To boost more renewable energy deployment, industry will like to see waiver of custom
Government should also propose innovative financial ways of phasing out of old and
duties and safeguard duties on renewable energy equipment imports till the time domestic
stranded thermal power assets.
manufacturing picks up. Further, more support needs to be provided to electric vehicles and storage technologies than can help in achieving clean, efficient and sustainable mobility.
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