Financial Daily from THE HINDU group of publications
Wednesday, Feb 09, 2005

Port Info

Group Sites

Industry & Economy - Power

Power dreams of duty cuts in Budget 2005

D. Murali

Chennai , Feb. 8

WHILE reacting to the July 2004 Budget, the Tata Power Company Managing Director, Mr Firdose Vandrevala, spoke of "two concerns in the power sector", viz. affordability and reliability. For the first, the industry banks on duty reduction on fuel and capital imports, while definite tax sops satisfy the second.

Thus, the Finance Minister promised alignment of tariffs with the ASEAN levels, and also conferred on the power industry a two-year beneficial window for renovation and modernisation projects under Section 80IA of the Income-Tax Act.

But that was last year. As an infrastructure industry, power will continue to receive the attention of those in power and the forthcoming Budget too may try to satisfy popular expectation by nibbling at cost irritants, working on capacity creation and ensuring the flow of funds for the purpose, not omitting the rural angle.

"Out of estimated 5,86,000 villages about 1,20,000 remain to be electrified," said the Secretary, Ministry of Power, at a World Bank Conference last year. Eight States that have achieved 100 per cent village electrification, viz. Andhra Pradesh, Goa, Haryana, Maharashtra, Kerala, Punjab, Tamil Nadu and Nagaland, constitute but 18 per cent of villages in the country. Therefore, a spur to rural electrification is unmistakably on the cards; as a necessity, that is, not as just a populist measure.

Is there a prospect of capping the rate at 5 per cent for all capital imports in power sector? "Yes," according to Mr Vedamororthy Namasivayam of PricewaterhouseCoopers, heading the `Government Reforms and Infrastructure Development in India' department.

For, such a move will not only lower the project cost but also tariff. As an added sop, there can be complete duty waiver if one is importing for setting up of generation and distribution systems in rural areas.

There is also a case for taking some load off coal, a key input for power generation, in view of soaring international prices and domestic shortage of this commodity.

For instance, NTPC is running on critical coal supplies that last for less than a week.

On his part, the Coal Secretary, Mr P.C. Parakh, has spoken of "a difference of opinion between the coal and power sectors" and to resolve the resultant supply constraints, the Coal Ministry has begun the process of allocating coal blocks to power companies, as the media reports.

To help, there can be "a reduction of customs duty on coal from 15 per cent to 5 per cent to bring it in sync with liquefied natural gas or LNG," opines Mr Namasivayam.

If one were to eavesdrop the `power' lines, there's also the prayer that the Government relax the definition of the `mega power project' to confer sops on more players, and also accelerate the Accelerated Power Development & Reform Programme (APDRP) by pumping in more funds aimed at reducing T&D losses.

For starters, the abbreviation is not theft and dacoity, as normally understood, but of transmission and distribution losses, robbing the industry of almost 50 per cent of power generated.

Power dreams, these are, but one can reliably forecast that before they become reality, they'd have to be first affordable in the numbers that the Finance Minister draws up in the coming weeks.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
IFC plans weather insurance products for Indian markets

Isolated showers in Kerala midlands
Auto majors see rise in Q3 input costs
China has its way at G7 meet
No question of cutting down subsidies for poor: Chidambaram
US graduates India out of aid budget
Applications invited for awards in waste management
Russian trade info centre opened
FICCI, Norwegian chamber sign MoU to boost ties
Sharjah free zone demo
NCB cautions pharma cos on distributors with dubious connections
7 doctors get Wockhardt awards
Drive to tackle jaundice in Kerala
Legislation on special economic zones — Commerce Ministry optimistic GoM will resolve differences
Indo-US summit to discuss infrastructure issues
AP Cabinet okays $300-m World Bank project
KFDC staff plea against closure
Kerala Minister's assurance on endosulfan plant
BPCL to expand Trombay refinery capacity to 12 m.t.
Tapti, Panna-Mukta gas fields — Operators asked to maintain supplies to existing consumers
AES Corp plans to bid for new power projects
Power dreams of duty cuts in Budget 2005
BHEL develops power saving tool
VAT panel seeks removal of CST waiver on inter-State purchases
AP Minister's fiat to tax officials on VAT regime
Kerala: Levy on liquor transport
Textile stocks on radar in post-quota regime
Textiles: New challenges in quota-free era
Minister to review textile sector financials
No plan to revise H1 B visa quotas, says US Ambassador
Caution on Kerala groundwater levels
Tuticorin Fisheries institute plans certificate courses
Deccan Gold identifies new prospects in AP, Karnataka
Nobel laureate's lecture in city
Presentation on `Vinci technology'
Management seminar
Art prints expo in Hyderabad
Export units keen on tax sops
Contributions to The Hindu Relief Fund
`Tea tourism' project of Bengal approved

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line