The very fact that the new government has integrated the three Ministries of Power, Coal, and Renewable energy into one, demonstrates the keenness of the government to accelerate power sector growth by not only resolving some of the complex issues confronting the sector but also providing integrated and holistic solutions. Many suggestions have been floated which may help to improve the situation in a big way like the few given below:
1. Income tax benefit under section 80 IA to be
extended to power projects commissioned till the end of the current five year Plan. The need for attracting investments, including FDI, in power sector continues. 2. Considering the huge gap between demand and supply of domestic coal, and to keep the price of power within limits, zero import duty on coal until at least next three years when domestic coal may be expected to bring down import substantially. 3. A power distribution reform scheme with substantial incentive to state utilities to bring down the financial loss from present about `80,000 crore( annual), through integrated actions on theft control, tariff rationalization and overall efficiency. Under an overall framework, state specific package linked to predetermined outcomes will be needed.
4. A five year programme for 24 by 7 power supply with
progressive targets for next 2, 3 and 5 years. Budgetary and incentive support for the same would be necessary, but those should be linked with targeted actions by each state. 5. Coal sector reform is overdue. Specific reform initiatives, with incentivized schemes, aimed at a minimum 10 per cent growth in domestic coal production through public sector as well as PPP mode. Coal regulator with statutory power, and new Coal Act are important initiatives which may be done without any further delay. 6. Hydro power proportion has declined drastically in last few years. Special package to restore the balance e.g. higher return on investment, longer term tax exemption, longer tenure loan. 7. viability gap funding for transmission projects particularly in North East, government supported road networks in hilly areas and river basins, with hydro project potential are essential to boost development of hydro projects.
8. Wind power capacity slowed down in last few years.
There is a need to bring back the same on fast track. 9. Accelerated Depreciation benefit for renewable projects as an option to the generation based incentive. 10.Innovative approaches would be needed to provide transmission solution to wind and solar projects for their optimal use and these schemes will need encouragement. 11.Energy Efficiency and demand side management initiatives have been very effective. Energy service companies can play even better and bigger role. Tax benefit under 80 IA to recognize energy service companies which could prove very useful in the fulfillment of mission on efficient use of energy. 12.Clean Energy Fund has to be channelized for meaningful schemes and projects which could further promote the cause of renewable energy. This fund could go to a financing SPV which could raise further fund. Specific schemes with time bound action programs could be financed.
13.A Transmission Constraint fund got created as
an outcome of short term power trade and power exchange operations. This got into consolidated fund of the government and nothing worthwhile has happened. This could also go to a financing SPV which could raise further fund and finance specific transmission projects aimed at removing transmission bottlenecks. 14.It is quite clear that in large parts rural India decentralized distributed generation ( DDG), both off grid and grid, could help states to provide power as also reduce huge technical and other losses. Viability Gap Funded PPP projects supported out of savings from losses, by states as well as also partly supported by GOI could go a long way to provide power to rural India.
Points for discussion
Express your opinion on the feasibility of each suggestion. How these can be enforced and who are involved in the implementation. What should be the time frame for implementation of the suggestions keeping in mind the risks due to technology advancement and dependence on imports. What mix of conventional power and DDG is suitable for rural development through rural electrification in our country. Any more suggestions to improve the power position.