BUDGET 2018 – Total Disappointment for Power Sector

BUDGET 2018 – Total Disappointment for Power Sector

- in Analysis, Opinion, Power

Power is essential to fuel the economic growth of India. An uninterrupted and reliable power supply is a must for keeping up the pace of development in India. Electricity is not only essential for industries and commercial establishments but also for households and agricultural purposes. But the country faces roadblocks in its attempts to unleash the full potential of India’s power sector. Country has 338 GW installed capacity against peak load demand of 160 GW, even then 05 Crore households having 30 Crore people have still no access to electricity
The biggest has been the launch of Pradhan Mantri Sahaj Bijli Har Ghar Yojana or Saubhagya, which really seeks to push the last mile to every household in this country.

Central Govt is talking about 500 lakh households getting power over a period of one year which is before 31st December. This is the biggest programme which will see a major transformation in the rural economy. However Finance Minister in Budget has announced already allocated Rs 16000 crore for this programme which means Rs 3200 for every household which needs review looking after weak power system network in far away rural areas which may require more finances to get strengthened to meet the requirements of new added connections in one year.

Country is also close to completing the electrification of 18,548 villages. Only 1272 more remain un electrified. In a sense, all this together will mean a big push on the renewable front — the emerging electrical vehicles, the charging infrastructure, the storage infrastructure, the up gradation of the existing power plants to confirm to the environmental norms etc.

According to new norms of MOEF for environmental old thermal generating stations will have to install Flue Gas Desulpherisation System (FGDS) and Selective Catalytic Reducer (SCR) system which will cost more than Rs 1 Cr per Mega Watt . It will be required for about 2 lakh Mega Watt capacity. This problem needed redressal in Budget 2018, unfortunately nothing has been mentioned in Budget.

India is presently experiencing a lack of coal supply in the domestic market. Accordingly, some power plants are compelled to import coal to meet their energy requirements. Since there are no taxes on electricity on the output side, any duty imposed on the procurement of coal forms a cost for the power companies. The burden of such increased cost is ultimately borne by the end consumer. Further, multiple operational inefficiencies and outstanding debts have led to a poor financial health of India’s power sector. No mention in Budget in this respect.

In order to meet the government’s objective of uniform and consistent supply of electricity to everyone and its initiative “24×7 Power for All”, it is essential that exemption from GST is provided to equipment procured for initial setting up of solar or wind power plants and for projects generating power using non-conventional materials. This would also help in reducing the costs of the sector which are already capital expenditure heavy. No mention in Budget.

Overall, on the generation side, we have about 338 gigawatts (GW) of installed capacity. The goal is to reach 540 GW in the next two years of which 175 is to come from the renewables. To meet the ever-increasing energy requirements of the country, efforts are required to increase the supply of renewable sources of energy. The renewable energy sector is eligible for various tax exemptions and concessions owing to the significant setup costs associated with it as well as the government’s agenda of promotion of green energy. However charging infrastructure and storage infrastructure is must to fully utilise renewable energy which has no mention in budget provision in Budget 2018 – 19.

(Writer is Chairman, All India Power Engineers Federation)

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