Budget 2022: Thermal power companies eye coal-cess cut, signals on GST for electricity
Power companies are hopeful that the Union Budget will waive or reduce the cess of Rs 400 per tonne of coal used in generating units that meet emission norms.
Thermal power generation companies are pegging their hopes on finance minister Nirmala Sitharaman to recommend that electricity be brought under the purview of the goods and services tax in the upcoming Union Budget, which would translate into lower tariffs for consumers.
The companies are also seeking a waiver or reduction of coal cess for power producers that have complied with sulphur oxide norms by adapting flue-gas desulphurisation equipment to significantly reduce emissions.
GST inclusion
Power companies have made representations to the government to include electricity in the GST list. The power ministry is said to be in favour of the move and has recommended it to the finance minister. However, it will not be an easy decision because it could dent the tax revenue of the Centre and the states.
While the final decision on the matter will be made by the GST Council, a joint forum of the Centre and the states, a push from the finance minister, who heads the council, will go a long way, the companies told Moneycontrol.
The industry estimates that by including electricity in GST, the cost of power for generation, distribution and transmission companies could reduce by at least 17 paise per unit and the benefit can be passed on to consumers.
Coal cess
Power companies are hopeful that the Union Budget will waive or reduce the cess of Rs 400 per tonne of coal used in generating units that meet emission norms.
“We have requested that the coal cess should be reduced or removed for those industries or plants that have already installed their pollution control systems,” Ashok Kumar Khurana, director general of the Association of Power Producers, told Moneycontrol. “There is no rationale in charging them the cess once they have installed the equipment to reduce emission. This move will also incentivise companies to adapt solutions to reduce their emissions that in turn will help India to cut its total emissions.”
Power infrastructure
The sector is waiting for the Central government’s Electricity Amendment Bill, which, among other things, seeks to de-license power distribution. But companies expect the budget to push transmission infrastructure.
“The government is expected to announce additional steps for the further development of transmission infrastructure and to improve the financial standing of discoms (distribution companies). The discoms have remained in stress, and stringent and immediate measures are required to overcome the financial and operational inefficiencies,” Brickwork Ratings said in a report.
