Piyush Goyal urged people to monitor ministry’s work to provide valuable feedback
India’s Power, Coal and New & Renewable Energy Piyush Goyal has urged people to monitor work of his ministries and to bring forth any deficiencies in working of system. The Minister said that the feedback from people help Government to work efficiently.
On the occasion, Goyal felicitated Dinesh Arora, ED, REC for achieving one-third of the rural electrification target, thereby electrifying more than 6000 villages across the country.
He also felicitated Venkatesh Diwedi GM, Technical, Energy Efficiency Services Limited (EESL) for crossing distribution of 7 crore LED bulbs and thus contributing immensely in Government’s drive for energy efficiency. The Minister also launched GARV newsletter for rural electrification on the occasion.
While highlighting various budget proposals relating to Power, Coal & Renewable Energy sectors, Goyal informed that the annual allocation for DDUGJY has been increased by 66% from Rs. 5100 crore (BE 2015-16) to Rs. 8500 crore. This is a positive development making more funds available for improving distribution infrastructure.
He said that assessee engaged in the business of transmission of power shall be allowed additional depreciation at the rate of 20% of actual cost of new machinery or plant acquired and installed in a previous year. This will be beneficial for POWERGRID and other transmission companies and help increase transmission capacity at lower cost. “PFC and REC have been included in the list of organisations who would be allowed to raise bonds during 2016-17,” he added.
Goyal stated that a budget proposal will be incorporated in CST Act which will allow application of CST rate on inter-state transfer of gas for Gas based plants. The Minister also mentioned that the benefit of concessional custom and excise duty (proposed in budget) would be available to power generation projects based on municipal and urban waste. This will result in reduction in the cost of generation of power.
Referring to Renewable Energy Sector, Goyal said that the Budget 2016-17 has proposed to levy Clean Environment Cess at Rs.400 per tonne, which will be used for development of renewable energy resources and various environmental protection measures. He informed that Plan Outlay to support Renewable Energy has been increased from Rs. 2,509 Crore in 2014-15 to Rs. 4,246 Crore in 2015-16; and further to Rs. 5,000 crore in 2016-17 budget.
The Minister told that Budget 2016 has provisions to mobilize funds at cheaper rate to ensure availability of cheaper power to the ultimate consumers.
In his media interaction, Goyal said reiterated that out of un-electrified villages, about 3000 villages to be electrified through renewable energy sources under the DDUJGY scheme. The budget also proposes 100% deduction of projects for 3 out of 5 years to Start-ups. It will encourage the entrepreneurs for rise startups in RE sector. A Special patent regime with 10% rate of tax on income from exploitation of patents is mentioned in the budget to give fill up to entrepreneurs to adoption of new technologies in RE sector.
Goyal said that solar pumps for irrigation and the pumps based on biomass likely to get the fill up in 28.5 lakh hectares which is to be brought under irrigation.
He further stated that solar lamp being exempted from excise duty from 25% to NIL and Basic Custom duty on Industrial solar water heaters increased from 7.5% to 10%.
The brief details of Budget Proposals concerning Power, & Renewable Energy Sectors are as follows :
Highlights of the Budget 2016-17 – Ministry of Power
Increased allocation for DDUGJY and IPDS schemes. The annual allocation has been increased by 66% from Rs. 5100 crore (BE 2015-16) to Rs.8500 crore. This is a positive development making more funds available for improving distribution infrastructure.
Total Annual Plan outlay for the Ministry of Power has been increased from Rs. 6800 crore (BE 2015-16) to Rs. 12200 crore in BE 2016-17. This increase is mainly due to enhancement in budget allocation for the above two schemes and for Power System Development fund (PSDF) for which the allocation has been increased from Rs. 300 crore (BE –2015-16) to Rs. 1900 crore (BE 2016-17).
Additional depreciation for transmission companies from FY18. [Section 32(1)(iia) of the IT Act]. Assessee engaged in the business of transmission of power shall also be allowed additional depreciation at the rate of 20% of actual cost of new machinery or plant acquired and installed in a previous year. This will be beneficial for POWERGRID and other transmission companies and help increase transmission capacity at lower cost.
PFC and REC have been included in the list of organisations who would be allowed to raise bonds during 2016-17. This would provide additional resources for these two Power Financing Companies during the next financial year.
Ministry is implementing a Scheme of Utilisation of Gas based power generation capacity which envisages provision of subsidy to DISCOMs to procure power from stranded and domestic gas based power plants. The Budget document proposes to amend Section 3 of the CST Act and seeks to insert an explanation as under :
‘where the gas sold or purchased and transported through a common carrier pipeline or any other common transport distribution system becomes co-mingled and fungible with other gas in the pipeline for system and such gas is introduced into the pipeline or system in one state and taken out from the pipeline in another state, such sale or purchase of gas shall be deemed to be a movement of goods from one state to another’
This explanation proposed to be incorporated in the CST Act will obviate the need to issue separate notification by Centre/States which is currently the case. This will be a contribution to procedural improvement.
• Valid agreement between importer / producer of power with urban local body for processing of municipal solid waste for not less than ten years from the date of commissioning of project” being provided as an alternative condition for availing concessional customs/excise duty benefits in case of power generation project based on municipal and urban waste.
Impact: The benefit of concessional custom and excise duty would be available to power generation projects based on municipal and urban waste. This will result in reduction in the cost of generation of power.
The Budget Speech in para 40, 41 and 81 appreciations work done in the area of Rural Electrification, transmission and generation and replacement of incandescent & CFL lighting with LED lighting by the Ministry of Power as:
“40. As on 1st April, 2015, a total of 18,542 villages were not electrified. The Prime Minister Narendra Modi, in his address to the Nation on 15th August, 2015 announced that the remaining villages will be electrified within the next 1000 days.
As on 23rd February, 2016, 5542 villages have been electrified. This is more than the total combined achievement of previous three years. The Government is committed to achieve 100% village electrification by 1st May, 2018…
In the other segments of the infrastructure sector, our Government has achieved the highest coal production growth in over two decades, highest ever capacity addition in generation, highest ever increase in transmission lines and in distribution of LED bulbs.”
Highlights of the Budget 2016-17 – Ministry of Coal
Clean Environment Cess:
The Budget 2016-17 has proposed to levy Clean Environment Cess at Rs.400 per tonne, which will be used for development of renewable energy resources, various environmental protection measures including Project Tiger, Wild Life Conservation and abatement of river pollution, etc.
Though the proposed enhancement has a nominal impact 12 Paise per unit on power generation, it would however help in addressing critical environmental issues, particularly development of clean technologies and promoting wild life conservation, abatement of river pollution, etc. which are of serious concern of the entire nation and need to be addressed on high priority.
When compared to this more the of Rs. 1,80,000 Crores under UDAY from 2019 onwards, this increase will be quite small.
Customs Duty on Heavy Earthmoving Machinery (HEMM):
The basic Customs Duty on HEMM other than dumpers has now been proposed to be enhanced from 7.5% to 10% i.e. an increase of 2.5%. This is envisaged to help the domestic manufacturers to support Make in India.
Highest coal production growth in over two decades:
Growth in all India coal production in 2014-15: 8.25%
Growth in production from April, 2015 to February, 2016:
CIL – 9.2 %; SCCL – 18%
Basic Custom Duty (BCD) on Coal & lignite revised to 2.50% from 2.50% / 10%.
Impact: This will lead to reduction in the cost of lignite
Highlights of the Budget 2016-17: Ministry of New & Renewable Energy
• Plan Outlay to support Renewable Energy has been increased from Rs. 2,509 Crore in 2014-15 to Rs. 4,246 Crore in 2015-16; and further to Rs. 5,000 Crore in 2016-17 budget. This will help in implementation/ expansion of renewable energy programmes to reach the target of 175 GW by 2022.
• Clean Environment Cess will enhance the funds available for promoting renewable energy projects and the infrastructure associated with it.
•Inverted Duty Corrected
This correction will lead to reduction in the capital cost of the wind power equipments, which in turn will reduce the cost of generation of power from wind power projects.
Excise duty on carbon pultrusions used for manufacture of rotor blades, and intermediates, parts and sub-parts of rotor blades for wind operated electricity generators reduced from 12.50% to 6%.
•Cheaper funds to boost investment in renewables
Mobilisation of additional finances to the extent of Rs 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority by raising Bonds.
Dedicated fund to provide credit enhancement to infrastructure projects by LIC. Renewable Energy projects may likely to get the share in the proposed dedicated fund.
Impact: It will help FIs to mobilise the funds at a cheaper rate which in turn will make the funds available for the development of the power sector particularly for projects of national importance and ensure availability of cheaper power to the ultimate consumers.
•Electrification of Villages:
As on 1st April, 2015, a total of 18,542 villages were not electrified. The Honourable Prime Minister, in his address to the Nation on 15th August,2015 announced that the remaining villages will be electrified within the next 1000 days .As on 23rd February, 2016, 5542 villages have been electrified.
Out of total un-electrified villages, about 3000 villages to be electrified through renewable energy sources which will enhance the demand for renewables.