- Total coal reserves stood at 301.564 billion tons, out of which 125.909 billion tons were proven reserves
- India reports a proven natural gas reserve measure of1488.73 billion cubic meters
- India is the fifth largest producer and consumer of electricity
- The revised tariff policy 2016 ensures the adequate return on investment to companies engaged in power generation, transmission and distribution, and ensures the financial viability of the sector in order to attract investments by companies
- 100% Foreign Direct Investment (FDI) is allowed under the automatic route in the power sector for generation from all sources (except atomic energy), transmission and distribution of electric energy and Power Trading, subject to all the applicable regulations and laws
- FDI in power exchanges up to 49% registered under Central Electricity Regulatory Commission (Power Market) Regulations, 2010 under the automatic route, subject to the following conditions, as laid down in the Policy.
- Foreign Institutional Investors (FII)/ Foreign Portfolio Investors (FPI) purchases shall be restricted to secondary markets only
- No non-resident investor/entity, including persons acting in concert, will hold more than 5% of the equity in these companies
- The foreign investment would be in compliance with Securities & Exchange Board of India (SEBI) regulations. Other applicable laws/regulations, security and other conditions
Electricity Act, 2003:
- Elimination of licensing for electricity generation projects
- Increased competition through international competitive bidding
- Demarcation of transmission as a separate activity
National Tariff Policy, 2006:
Revised Tariff Policy, 2016:
- Ensure availability of electricity to consumers at reasonable and competitive rates
- Ensure financial viability of the sector to attract investments
- Promote transparency, consistency and predictability in regulatory approaches across jurisdictions and minimize perceptions of regulatory risks
- Promote competition, efficiency in operations, and improvement in quality of supply
- Promote generation of electricity from renewable sources
- Promote Hydroelectric Power generation including Pumped Storage Projects (PSP) to provide adequate peaking reserves, reliable grid operation and integration of variable renewable energy sources
- Provide for evolution of a dynamic and robust electricity infrastructure for better consumer services
- Facilitate supply of adequate and uninterrupted power to all categories of consumers
- Ensure creation of adequate capacity including reserves in generation, transmission and distribution in advance, for reliable supply of electricity to consumers.
Ultra Mega Power Projects (UMPPs):
- Govt. of India has taken initiative for setting up of Ultra Mega Power Projects of 4000MW capacity each to reap the benefits of economies of scale, fast capacity addition and provide The Ministry of Power identified Power Finance Corporation (PFC) as the nodal agency for the UMPPs. In order to enhance investors’ confidence, reduce risk perception and get good response to competitive bidding, PFC incorporates Special Purpose Vehicles (SPVs) for each UMPP to undertake the bidding process on behalf of the power procuring (beneficiary) States. The purpose of the SPVs is to carry out the bid process management and obtain various clearances/consents for the projects so that the same are transferred to the successful bidder along with the SPV, who is selected through the tariff based International Competitive Bidding (ICB) in accordance with the Guidelines issued by Ministry of Power. These logistic supports provided by the SPV prior to award of the project is considered necessary to enhance the investor’s confidence, reduce risk perception and get a good response to the competitive bidding process.Based on the above initiative of Government of India and its implementation process, Four UMPPs namely Sasan in Madhya Pradesh, Mundra in Gujarat, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand have already been awarded to the successful bidders. Mundra UMPP and Sasan UMPP are fully commissioned and are generating electricity
Renovation & Modernization of Distribution System
Govt. of India launched two schemes, namely, Deendayal Upadhyaya Gram Jyoti Yojana(DDUGJY) and Integrated Power Development Scheme (IPDS) in December 2014 for providing capital subsidy to the States for strengthening of sub-transmission and distribution networks in rural areas and urban areas.
Under DDUGJY scheme, capital subsidy is being provided for feeder separation, electrification of unelectrified villages and households, metering and system strengthening & augmentation of distribution system in rural areas. The erstwhile scheme of RGGVY has been subsumed in DDUGJY as a separate component for rural electrification in the country. REC is the nodal agency for the operationalization of DDUGJY in the Country. Projects worth USD 16.72 billion (including RGGVY) have been sanctioned under DDUGJY and out of which USD 6.58 billion have been released till 31st July 2016.
Under IPDS Scheme, capital subsidy is being provided for strengthening and augmentation of distribution system, metering of distribution transformers/feeders/consumers, and IT enablement in distribution sector in the urban areas. The erstwhile Restructured Accelerated Power Development And Reform Programme (R-APDRP) scheme has been subsumed in the IPDS as a separate component for IT enablement and system strengthening. PFC is the nodal agency for the operationalization of IPDS in the country. IPDS Projects worth USD 9.55 billion (including R-APDRP) have been sanctioned and out of which USD 1.42 billion have been released till 31st July 2016.
Domestic and Street LED lighting program:
Ministry of Power has launched UJALA (Unnat Jyoti by Affordable LED for All) Yojana for replacement of 770 million incandescent domestic bulbs with energy efficient LED bulbs in the country. Additionally, 35 million street lights are also being replaced with energy efficient LEDs. Under the Domestic Efficiency Lighting Programme, out of a target to replace 770 million incandescent bulbs in the country, about 140 million LED bulbs have already been distributed by 31st July 2016. Under Street Lighting National Programme, about 0.9 million smart & energy efficient LED street lights have been installed in the country by 31st July 2016.
Fuel Supply Agreement:
- Fuel supply agreement with Coal India Ltd. will ensure the availability of coal for power companies over the long term.
Public Private Partnership(PPP):
- To reduce dependency on imported coal, a PPP policy framework will be devised with Coal India Ltd. to increase coal production.
National Electricity Policy
The Govt. of India is revising the National Electricity Policy to bring out far reaching changes in the power sector, to ensure a cleaner atmosphere by increasing renewable generation including rooftop solar PV generation using the energy of the sun, increasing electric vehicles in cities and towns that are polluted on account of emissions from diesel and petrol vehicles, improved reliable supply of power to consumers through smart grid. This policy would also encourage efficient utilization of resources including land and water.
Ujwal DISCOM Assurance Yojana (UDAY)
The Scheme “UDAY” (Ujwal DISCOM Assurance Yojana) has been formulated and launched by the Government on 20.11.2015 for the financial and operational turnaround of State owned DISCOMs (Electricity Distribution Companies). The scheme UDAY envisages reform measures in all sectors – generation, transmission, distribution, coal, and energy efficiency.
The Scheme also envisages that States shall take over 75% of DISCOM debt as on 30.09.2015 over two years i.e. 50% in FY 2015-16 and 25% in FY 2016-17. The scheme aims to reduce interest burden, reduce the cost of power, reduce power losses in Distribution sector, and improve operational efficiency of DISCOMs. The scheme also incentivizes the States by exempting State takeover of DISCOM debts from Fiscal Responsibility & Budget Management (FRBM) limits for two years; increased supply of domestic coal; coal linkage rationalization; liberally allowing coal swaps from inefficient to efficient plants; allocation of coal linkages to States at notified prices and additional/priority funding in schemes of Ministry of Power and Ministry of New and Renewable Energy, if they meet the operational milestones in the scheme. However, no financial implications are involved on the part of Government of India.
The scheme also envisages that States accepting UDAY and performing as per operational milestones will be given additional/priority funding through DDUGJY, IPDS and Power System Development Fund (PSDF) or other such schemes of Ministry of Power and Ministry of New and Renewable Energy. Such States shall also be supported with additional coal at notified prices and, in case of availability through higher capacity utilization.
States not meeting operational milestones will be liable to forfeit their claim on IPDS and DDUGJY grants.
Action taken after the launch of the Scheme:
So far Sixteen (16) States in all viz. Jharkhand, Chhattisgarh, Rajasthan, Uttar Pradesh, Gujarat, Bihar, Punjab, Jammu & Kashmir, Haryana, Uttrakhand, Goa, Karnataka, Andhra Pradesh, Manipur, Puducherry and Madhya Pradesh have signed the MOUs.
- Furthermore 5 States namely – Himachal Pradesh, Maharashtra, Odisha, Tripura and Assam, have also given their `in-principle’ approval to participate under UDAY. Ministry of Power is interacting with rest of the States who have conveyed their willingness to join the scheme to finalize MoUs.
- DoE (M/o Finance) has already given permission to Eight States–Jharkhand, UP, Chhattisgarh, Rajasthan, Bihar, Punjab, J&K and Haryana to issue bonds to the tune of USD 23.04 billion.
- The above mentioned eight States have issued Bonds to the tune of USD 25.65 billion including Bonds issued by Rajasthan DISCOMs worth USD 1.9 billion, and UP Discoms worth USD 0.827 billion.
In order to facilitate such States who want to join but could not join the scheme, the Govt. of India extended the time lines, to avail the benefits of UDAY Scheme, to such States up to 31.03.2017.
- Extension of sunset date under section 80 IA (4) (iv) of the Income Tax Act for the power sector (generation, distribution and transmission) to 31.03.2017 for claiming deduction of 100% of profits and gains for 10 consecutive assessment years
- Adequate quantity of coal will be provided to power plants which were commisionned Mision in Marke! March 2015
- Allocation of USD 15.38 million for preparatory work for a new scheme creating ultra-modern super critical coal-based thermal power technology aimed at providing cleaner and efficient thermal power
- Allocation of USD 76.92 million to Deen Dayal Upadhyaya Gram Jyoti Yojana, for launching feeder separation to augment power supply to the rural areas and for strengthening sub-transmission and distribution systems
- Full exemption from central excise duty is being provided to liquefied propane mixture, liquefied propane, liquefied butane and liquefied petroleum gases for supply to non-domestic exempted category customers by the Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL) or Bharat Petroleum Corporation Limited (BPCL) retrospectively from 08.02.2013
- The duty structure on non-agglomerated coal of various types is being rationalised at 2.5% Basic Customs Duty (BCD) and 2% Counterveiling Duty (CVD). The BCD on anthracite coal and other coal is being reduced from 5% to 2.5%
- The CVD on anthracite coal, coking coal and other coal is being reduced from 6% to 2%
- Exemption from BCD is being granted on re-gassified LNG for supply to Pakistan
- Imports of liquefied propane mixture, liquefied propane, liquefied butane and liquefied petroleum gases for supply to non-domestic exempted category customers by the IOCL, HPCL or BPCL retrospectively from 08.02.2013
Tax Incentives and R&D Incentives:
- Industries and infrastructure sectors including the power/energy efficiency sectors with in-house R&D centers get a write-off in revenues and capital expenditure incurred on R&D
- A weighted tax deduction is given under section 35 (2AA) of the Income Tax Act to industry/private sponsored research programmes
- A weighted deduction of 200% is granted to assesses for any sums paid to a national laboratory, university or institute of technology, or specified people with a specific direction and the said sum will be used for scientific research within a programme approved by the prescribed authority
- India offers additional incentives for industrial projects in certain states
- Incentives are in areas such as rebates in land cost, the relaxation of stamp duty exemption on the sale and lease of land, power tariff incentives, a concessional rate of interest on loans, investment subsidies, tax incentives, backward area subsidies and special incentive packages for mega projects.
Area based Incentives:
- Incentives are available for the setting up of projects in special areas like the North-East, Jammu & Kashmir, Himachal Pradesh & Uttarakhand.