Living up to the BJP’s pre-election promise of providing electricity 24x7 to every home, Finance Minister Arun Jaitley came out with bag of goodies for the power sector in the Budget 2014-15.

Jaitley’s Budget proposes extension of 10-year tax holiday to undertakings which begin generation, distribution and transmission of power by March 31, 2017.

The move is expected to give an impetus to both power generation and distribution.

“The stability in our policy will help investors plan their investments better,” Jaitley said in his Budget Speech.

Will boost investor interest According to the Association of Power Producers, this will provide a significant boost in investor interest in the power sector and also benefit the end consumer.

“Power plants have long gestation times and the extending 10-year tax holiday for power companies to March 31, 2017, will help achieve India’s capacity generation targets,” Tata Power said in a statement.

Jaitley also announced that power plants which are already commissioned or would be commissioned by March 2015, will be provided adequate quantity of coal. “Comprehensive measures for enhancing domestic coal production are being put in place along with stringent mechanism for quality control and environmental protection, which includes supply of crushed coal and setting up of washeries,” said the Finance Minister, adding that coal linkages will be rationalised to reduce transportation costs.

“Fuel security to domestic coal-based plants could become a reality by providing coal linkages, improving coal production, and optimising transport of coal,” Tata Power’s statement added.

According to the APP, the rationalisation of coal linkages will help bring down the landed price of coal.

Apart from increasing coal supply from domestic sources, the Finance Minister has also rationalised the customs duty on imported coal. From now on, all varieties of imported coal will have 2.5 per cent basic customs duty and 2 per cent CVD.

Tata Power welcomed the move but said a lot more needs to be done to make existing imported coal-based plants viable.

Minister of State (Independent Charge) Power, Coal and New and Renewable Energy, Piyush Goyal, welcomed the announcements and said the standardisation of customs duty on coal — across grades and types — will end disputes immediately.

“Our moves for improving coal quality by supplying crushed and washed coal, ensuring adequate coal supply for the already commissioned and would be commissioned power plants will unlock dead investments,” Goyal added.

One of the new schemes for the power sector include ₹100 crore for the preparatory work of the Ultra Modern Super Critical Coal Based Power Technology which would promote cleaner and efficient thermal power. The Finance Ministry has also set aside a sum of ₹500 crore for the Deen Dyal Upadhyay Gram Jyoti Yojana for feeder separation and augment power supply to rural areas for strengthening sub-transmission and distribution systems.

Related Topics