Union Budget 2020-21: Infra firms pitch for captive renewable energy policy, exemption from cross subsidy charges

  • Infrastructure sector on Friday urged the government to bring captive renewable policy and exempt from cross-subsidy and transmission charges to make renewable energy more viable for those willing to set up clean energy plants beyond factory boundaries

  • The infrastructure companies raised these issues during a pre-budget consultation with Finance Minister Nirmala Sitharaman and top officials from finance, new & renewable, road transport and environment ministries

  • They also asked to make finance available for real estate and affordable housing to boost consumption of cement and other inputs like steel

New Delhi: Infrastructure sector on Friday urged the government to bring captive renewable policy and exempt from cross-subsidy and transmission charges to make renewable energy more viable for those willing to set up clean energy plants beyond factory boundaries.

The infrastructure companies raised these issues during a pre-budget consultation with Finance Minister Nirmala Sitharaman and top officials from finance, new & renewable, road transport and environment ministries.

They also asked to make finance available for real estate and affordable housing to boost consumption of cement and other inputs like steel.

Besides, they were of the view that the government should release stuck up funds meant for infrastructure sectors as soon as possible for bringing in buoyancy in the economy.

"We asked the government to see, how can finance be made available for real estate and affordable housing. We also asked to release funds withheld at different levels in the government.

"Cement and other Core infrastructure sector can do a lot of work toward renewable energy. But the deterrents are cross-subsidy and transmission charges. These two charges made renewable energy even more expensive than thermal power," Dalmia Bharat Cement MD & CEO Mahendra Singhi said after the meeting.

The infrastructure players have asked the government to bring captive renewable energy policy and give exemption from cross-subsidy and transmission charges for clean energy plants beyond factory boundaries, he added.

Infrastructure sector players, particularly cement, claimed that they can also set up 12GW to 15GW of renewable energy projects and there is a positive mood on this in the country.

 Union Budget 2020-21: Infra firms pitch for captive renewable energy policy, exemption from cross subsidy charges

File image of finance minister Nirmala Sitharaman. PTI

The cross-subsidy charges ranging from Rs 1.5 to Rs 2 per unit and transmission charges are to the tune of 50 paisa per unit. These add Rs 2.5 per unit to the cost of clean energy, which comes around Rs 3.5 per unit. That make renewable energy cost Rs 6 per unit, which is even higher than thermal power cost in most of the cases.

On the tax issues, he said that there was no discussion in the meeting held on Friday.

Cement sector is paying GST (Good & Service Tax) at the rate of 28 per cent and contributing around Rs 40,000 crore annually to the exchequer.

They also informed the minister that how can infrastructure sectors can play a role in dealing with plastic and municipal waste or bio mass.

"Government is positive about it. Let's see what best comes out (budget)," he added.

The main areas of discussion during the meeting included issues relating to challenges in the infrastructure sector vis-a-vis framing of trade rules and policies in global context, quality of resilience of infrastructure sector and related finance, railway infrastructure, enhanced focus on adapting renewable energy for economy and environment, and climate-resilient infrastructure development among others, the finance ministry said in a statement.

The stakeholders of infrastructure sector and experts of the energy sector and climate change gave a wide range of suggestions in the meeting including the availability of finance for real estate, infrastructure and affordable housing; renewable energy sector to have larger capacity creation, further fine-tuning in IT Act and lower duties and softer lending rates.

They also suggested on automotive industry's role in fighting climate change through support for electric mobility, scrapping policy for old polluting vehicles and focus on mass transport powered by renewable energy; attention on taxonomy on green economic activities/climate finance; climate compliant investment and more funds for combating air pollution and increasing efficiency of resources.

They also called for promoting energy efficiency in the SME sector via government support to cluster-based intermediaries and faster phasing out of depreciated coal-fired power plants.

The suggestions also include a push to bio-fertiliser; viability gap funding for batteries to encourage renewable energy power storage, expansion of existing Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM), promotion of energy-efficient appliances including LPG Cooking stoves and bringing technology for improving Railway infrastructure.

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Updated Date: Jan 23, 2020 19:53:11 IST