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Power
The country continues to face power deficit due to delay in the commissioning of new capacities, fuel shortage in
existing plants and deficiencies in the T&D system. However, the UPA government has always viewed the power
sector as one of the major drivers of India’s economic growth, which is mirrored in the ambitious targets set by it
for the sector in the Eleventh and Twelfth Fived-year Plans. More measures are expected from the government to
expedite the capacity additions in the sector.
Sufficient coal availability is likely to be a key constraint for the power sector as the coal-based power plants have
been facing fuel shortage on account of various reasons such as delay in procuring coal linkages, issues in
obtaining environment clearances and other regulatory approvals for developing coal blocks, hurdles in expansion
of coal blocks, and logistical and infrastructural issues.
Some of the anticipated Budget announcements in favour of the power sector include: 1) Extension of benefits
under 80-IA beyond FY2011, 2) Elimination of the duty on imported power equipment, 3) Abolition of duty on
capital and fuel inputs borne by the private power generating companies, and 4) More incentives to promote
renewal energy projects and coal mining activities.
Of all the anticipated announcements, we believe there is high likelihood that only the exemption under section
80-IA will be extended by another year.
Budget Expectations
Head Current Status Wish List Potential Impact
Deduction under Section Available only to project
developers till March
Extension of the scheme
As per Section 80-IA, power generating companies are
eligible for 100% deduction of the profits for 10
consecutive years during the first 15 years of
operations. The benefit under this section is available
only till FY2011. Extension of the benefits beyond
80IA FY2011. beyond FY2011 FY2011 will be of a major advantage to the project
developers, as it will substantially reduce their tax
burden.
Positive for the private power generation companies.
Duty on import of Power
Equipment
5% duty on equipment used
for projects awarded under
the International
Competitive Bidding
No duty
Abolition of duty would result in reduction of power
cost.
Positive for generation companies setting up plants
with imported equipment like Reliance Power and
process. Adani Power.
Reduction of import duty
on coal Currently, 5% import duty. No duty Neutral for regulated business; Positive for merchant
capacities and plants based on imported coal.
Top Picks
NTPC
CESC
GIPCL
PTC
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Power
The country continues to face power deficit due to delay in the commissioning of new capacities, fuel shortage in
existing plants and deficiencies in the T&D system. However, the UPA government has always viewed the power
sector as one of the major drivers of India’s economic growth, which is mirrored in the ambitious targets set by it
for the sector in the Eleventh and Twelfth Fived-year Plans. More measures are expected from the government to
expedite the capacity additions in the sector.
Sufficient coal availability is likely to be a key constraint for the power sector as the coal-based power plants have
been facing fuel shortage on account of various reasons such as delay in procuring coal linkages, issues in
obtaining environment clearances and other regulatory approvals for developing coal blocks, hurdles in expansion
of coal blocks, and logistical and infrastructural issues.
Some of the anticipated Budget announcements in favour of the power sector include: 1) Extension of benefits
under 80-IA beyond FY2011, 2) Elimination of the duty on imported power equipment, 3) Abolition of duty on
capital and fuel inputs borne by the private power generating companies, and 4) More incentives to promote
renewal energy projects and coal mining activities.
Of all the anticipated announcements, we believe there is high likelihood that only the exemption under section
80-IA will be extended by another year.
Budget Expectations
Head Current Status Wish List Potential Impact
Deduction under Section Available only to project
developers till March
Extension of the scheme
As per Section 80-IA, power generating companies are
eligible for 100% deduction of the profits for 10
consecutive years during the first 15 years of
operations. The benefit under this section is available
only till FY2011. Extension of the benefits beyond
80IA FY2011. beyond FY2011 FY2011 will be of a major advantage to the project
developers, as it will substantially reduce their tax
burden.
Positive for the private power generation companies.
Duty on import of Power
Equipment
5% duty on equipment used
for projects awarded under
the International
Competitive Bidding
No duty
Abolition of duty would result in reduction of power
cost.
Positive for generation companies setting up plants
with imported equipment like Reliance Power and
process. Adani Power.
Reduction of import duty
on coal Currently, 5% import duty. No duty Neutral for regulated business; Positive for merchant
capacities and plants based on imported coal.
Top Picks
NTPC
CESC
GIPCL
PTC
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