Budget 2013 welcomed by power sector
The recent Union Budget has nothing extraordinary for the industry, except for those companies with annual income of more than Rs.100 million, which are going to have tax surcharge of 10 per cent. However, the power sector got a few goose bumps, which is better than nothing.The crisis-ridden power industry welcomed the budget proposals as the wind power sector heaves a sigh of relief as the finance minister allocated Rs 8 billion for ministry of new and renewable sector. Even the oil and natural gas blocks under NELP have got something to cheer for as they would be cleared this fiscal year.
We were hoping for some corrective measures to revive the downturn in the domestic electrical equipment industry which is reeling under the twin onslaught of the slowdown in the country’s power sector, which has depressed domestic demand. Additionally, the rapidly escalating imports of electrical equipment. This has resulted into underutilisation of the manufacturing capacity for electrical equipment.- J. G. Kulkarni, President, IEEMA
Finance minister’s announcement in the Union Budget for 2013-14 to extend tax holiday up to March 2014 is a welcome move for the power sector, which has been facing many bottlenecks in recent past. However, the announcement to impose 2 per cent customs duty on coal import is disappointing as many power projects in the country are suffering from fuel-linkage issues. The GBI reintroduction will help the power sector in terms of motivation for installing additional capacity and reducing power deficit of country. Further, the government’s announcement to provide low-cost finance to renewable project should be seen a positive development for sector. It will help the companies pass on the lower financing cost to end users. Low cost of finance shall improve project viability as India is left with low energy yield sites.- Hemant Kanoria, Chairman, DPSC Ltd
Overall it was a good budget in the right direction for growth and attracting foreign investment, given the constraints of fiscal deficit, inflation, and slowdown in manufacturing we faced currently. For the power sector, inevitability of coal imports and proposed PPP model with CIL as a stakeholder is a positive step. Infrastructure and port development to sustain the supply chain that will involve 180 million tonnes is needed too. Introduction of financial instruments especially in longer term debt and market creation are designed to facilitate this over the long term, but supply chain issues in the shorter term may continue to persist.- Pratik Kadakia, Principal, Roland Berger Strategy Consultants
The Union Budget seems realistic and credible and is a sincere attempt toward achieving fiscal consolidation with heavy emphasis on infrastructure sector. The subsidies in petroleum sector are gradually diminishing, food and fertiliser subsidy too are at reasonable level. The upward revision of import duty, from 1 per cent to over 4 per cent on steam coal imports will adversely impact the industry as it will lead to increase in cost of power generation. This is little amusing as the country has huge deficit in coal, and the government is trying to minimise cost by augmenting coal supply through various initiatives for domestic production as well as opting for price pooling of domestic and imported coal.- Gautam Adani, Chairman, Adani Group
Allocation of Rs.8 billion for the Ministry of New & Renewable Energy and restoration of GBI is a very good move for renewable energy industry. I welcome finance minister’s move to provide low interest bearing funds from National Clean Energy Fund to IREDA for lending to viable renewable energy projects. This will help in lowering interest cost which will ultimately benefit the customer. The initiative on renewable energy will also lower the coal import bill which has been one of the main reasons for high current account deficit as highlighted by the finance minister.- P. P. Gupta, Managing Director, Techno Electric & Engineering Co. Ltd.
Tata Power welcomes the budget 2013 presented by Finance Minister P. Chidambaram. The initiatives toward strengthening financial sector and the decision to extend tax holiday will positively impact capacity additions. We are thankful for the minister’s announcement to equalise the custom and CVD for steam and bituminous coal used in thermal power generation at 2 per cent each as this provides clarity to otherwise claims that got raised by customs department. The decision to support the renewable and non-conventional energy sector by various initiatives is positive; however, the real boost for the sector would come by strengthening the Renewable Purchase Obligations (RPO) mechanism. In addition, a long-term view needs to be taken to ensure energy security through the development of appropriate alternatives to conventional fuels and also to accelerate distribution reforms.- Anil Sardana, Managing Director, Tata Power