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Power producers appear guarded while welcoming the measures to boost investments and offer relief on the tax front.
Partnership boost
Mr Anil Sardana, Managing Director, Tata Power , lauded the recommendations for economic recovery, spurring growth, removing bottlenecks and promoting public-private-partnerships.
The extended tax incentives, the decision to allow ECBs and reinforcement of intention to introduce DTC and GST in the near future should create a positive investment climate, he said.
Welcoming the government's continued interest in giving a boost to solar energy projects, he said the waiver for thermal power companies will benefit upcoming projects.
The removal of customs duty on imported coal, natural gas, LNG, and the incentives for the mining sector will marginally improve coal supply. But, it is still a far cry from achieving adequate fuel security, he felt.
“We expect stronger sustained steps to be taken beyond the Budget, to address the core issues faced by the power sector,” he said.
On ECB
An attempt has been made to provide relief on various fronts to address the issues of the power sector, said Mr V. Suresh, CFO, Essar Power Business Group .
Mr Suresh said liberalisation in ECB financing will enable availability of more debt resources at a lower cost for the power sector. The dividend distribution tax (DDT) rationalisation will help improve return on equity for the multi-tiered structure of most power companies. To sum up, this, along with steps being taken to improve coal availability signals a significant turnaround for the power sector.
Mr Vardhan Dharkar, CFO, KEC International , said there are several steps to increase investments in infrastructure projects particularly in power, water and the railways segment. However, the increase in excise duty and service tax by two per cent will impact margins of industry across the board.
Mr Pradeep Bhargava, Managing Director, Cummins Generator Technologies India , said the problems of the industry were far more than what customs duty relief or ECBs can address.
Mr Shreegopal Jaju, AVP-Corporate Access, Emkay Global Financial Services , said the health of the State Electricity Boards and distribution companies, besides the tariff structure, were crucial to sustain the overall health of power projects.
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