Impact of union

budget 201516 on power

sector
Amit Kumar Singh
BKFS- 14B104

POWER SECTOR
Union Budget 2014-15
Expectation: The power sector is one of the most critical yet the most deprived
sector in the country. The expectation was on kick-starting investment across the
power value chain, from generation to transmission and distribution, along with
reforms for state electricity boards. Announcement on boosting renewable power
generation were also expected.
Budget Proposals: The budget was overall positive with multiple measures
aimed at boosting power generation and strengthening transmission &
distribution. It allocates INR500 crore to boost rural infrastructure and proposes
that adequate quantity of coal be provided to power plants commissioned before
March 2015; ultra-modern solar power projects be taken up in Rajasthan, Tamil
Nadu and Ladakh with INR500 crore allocates INR200 crore for power reforms in
Delhi; extends the 10-year tax holiday on projects (generation, T&D) that start
operations by 2017; and earmarks INR100 crore for preparatory work of clean
thermal energy scheme.
Impact budget on the power sector 2014-15: Power projects across the
country have suffered due to non-linkage with coal supplies because of
regulatory bottlenecks. Hence, end of the impasse on coal linkage is a much
needed relief. The 10 year tax holiday will primarily benefit independent power
producers plagued with issues such as fuel supply shortages. The higher
allocation to renewable power projects is the need of the hour
Union Budget 2015-16
Expectation: The thrust of the Union Budget 2015-16 is expected to be on
infrastructure by way of an increase in government's own capital expenditure
along with measures to increase private anticipation for the development of
infrastructure. The government has clearly highlighted its long-term priorities like
infrastructure (smart cities, renewable energy, railways, roads, inland waterways,
etc) and manufacturing (Make in India) etc.
Budget proposals: Five more ultra-mega power projects (UMPPs), under the
plug and play model will be set up with total investments of Rs one lakh crore.
Govt to allocate Rs 75 cr for electric vehicles.

Impact of budget on the power sector 2015-16: 1, 75,000-megawatt target

set for clean energy installations by 2022. This would comprise 1,00,000 MW of
solar power, 60,000 MW of wind power, 10,000 MW of energy from biomass and
5,000 MW from small hydroelectric projects. Currently, India's clean energy
capacity is 33,000 MW. Increasing coal cess to Rs 200 a tonne from Rs 100 will
be helpful for sustaining subsidies to clean energy projects. Govt sees GDP at 88.5% in FY16 so there will be growth in the sector too.

The Company chosen by me is Tata power which has been into renewable
sources of energy and recently it has commissioned the first unit of its Dagachhu
hydro power plant having a capacity of 63 MW in Bhutan. The company has

commissioned 63 MW sized unit of its 126 MW Dagachhu hydro power plant in

Bhutan.
Dagachhu project is a joint venture between Tata Power and Druk Green Power
Corporation, owned by Royal Government of Bhutan and National Pension and
Provident Fund of Bhutan. With the commissioning of the first unit of this plant,
Tata Power's overall hydro power generation capacity now stands at 513 MW and
the total at 8,684 MW. Dagachhu Hydro Power Corporation has entered into a 25year Power Purchase Agreement with Tata Power Trading Company Ltd (TPTCL, a
company of Tata Power) for sale of power from the project. The power generated
from the project shall be sold by TPTCL in the Indian power market. Shares of
Tata Power were trading at Rs 85.65, down 0.41 percent on the BSE.

Sources and reference:

1. http://www.moneycontrol.com/news/business/tata-power-commissionsfirst-unitbhutan-hydro-plant_1319052.html dated 03/03/2015
2. http://www.moneycontrol.com/budget-2015/ dated 03/03/2015
3. http://www.thehindu.com/business/budget/live-union-budget2015/article6944394.ece dated 03/03/2015
4. http://indiabudget.nic.in/ dated 03/03/2015
5. http://indiabudget.nic.in/es2014-15/echapvol2-06.pdf