NEW DELHI : The Government acted as party-pooper for fuel consumers rejoicing over the falling crude oil prices by repeatedly jacking up excise duty on petrol and diesel in a bid to extract more money from the sector and bridge its fiscal deficit.
As the price of Indian crude basket slumped to 34.25 dollar per barrel on December 15, from over 39 dollar per barrel a fortnight ago, the government announced 30 and 117 paise per litre hikes on petrol and diesel prices, respectively.
Since NDA came into power in May 2014, the government has more than doubled excise duty on auto fuels. As the Government reaps windfalls from the oil sector, it faces heat over vehicular pollution. What is more worrying, Capital is in the spotlight for notoriously high pollution levels. Under public pressure over rising air pollution, Petroleum Minister says his ministry is considering leapfrogging to Bharat-VI from Bharat-IV, skipping the Bharat-V.
However, it has turned up the heat on state-owned oil marketing companies which have already spent Rs 55,000 crore for upgrading refineries to produce Bharat-III and Bharat-IV and now will have to invest another Rs 80,000 crore to produce Bharat-VI grade fuel.
But meanwhile, party continues for natural gas consumers as the Government has further reduced prices of the natural gas in October as part of its six-monthly price revision in keeping with the movement in the global crude oil market.
While the party is on for gas consumers, producers too may not have to wait much longer for bash. The Government has proposed to allow market-determined pricing for natural gas for bigger fields too, following the pricing regime announced for 69 marginal fields.
However, it has decided to say goodbye to production sharing contract regime and introduce revenue-sharing, a move that it thinks would bring in more transparency, though industry players differ.
In the renewable energy segment, it is sunny side up for the solar power as investors remain hooked on the sector. Cumulative capacity addition in solar generation crossed 4,000 MW milestone though remained far behind wind energy which has seen addition of over 24,000 MW capacity. The Indian solar sector hogged the international limelight when Prime Minister Narendra Modi launched a global alliance of solar countries at the Paris climate talks.
Domestically, solar tariff hit a new low as SunEdison quoted Rs 4.63 per unit price in NTPC?s e-reverse auction for Telangana projects, bolstering of solar power reach grid parity sooner rather than later.
The Government organized the first ever global investor meet, RE-INVEST, and the response was phenomenal. It received total of 2,73,000 MW green commitments including 62,000 MW of renewable manufacturing in the event. On the occasion, 14 banks and financial institutions, 8 PSUs and private manufacturers, 15 private sector companies gave 70,000 MW of renewable finance commitments. Offshore wind power sector too got a policy this year, for the first time.
The Reserve Bank too warmed up to renewable energy, granting priority sector status to lending to the sector. The Government has proposed amendments to the National Tariff Policy to push consumption of renewable power.
To achieve its objective of Power for All by 2019, the Centre brought a new financial package to restore financial health of stressed power distribution companies.
The scheme, called UDAY, is aimed at making state governments financially accountable for their power sector. States will have to take over 75 per cent of their discom’s outstanding loans. In return, they will get carrot of reduction in payable interest rates on outstanding loans from 14-15 per cent to 7-8 per cent.
This is the third lifeline extended by the Centre to discoms. Two offered in 2012 and 2003 failed to work and discoms came back to square one. But the NDA government maintains that UDAY will be the final solution to the state power sector woes. Anyway, only time will tell if UDAY is any different from previous packages.
The easier thing comes first debt restructuring- and harder one which would be compliance with stringent conditions, later. No surprise, states have lined up to access the facility. About a dozen states have already approached the power ministry for access to the Rs 4.43 lakh crore fund for restructuring their discoms debts.
While there is action on the power distribution front, generation side is hit by slowdown. Nobody knows when bidding will start for five ultra mega power projects announced by the Government in the Union Budget 2014-15.
Electricity generation too seems to be stagnating due to weak demand for electricity from the industry. Since growth of the power sector is closely linked to the health of the economy, perhaps it will take a while before power consumption growth revives.
But meanwhile, coal sector is doing well. Those who used to complain about inefficiency of the coal sector have kept their mouth shut as there is more coal available than power plants can consume.
The government has targeted to increase coal production to 1.5 billion tonnes by 2020. But the moot question is where all this coal will go Coal stocks are piling up at power plants. The reason is they are having to operate at low capacity as discoms are not buying electricity. Discoms say they cannot be blamed for this as there is not much demand for electricity from industry.
But unfazed by poor capacity utilization in the power sector, the Government is pushing Coal India Ltd on increasing production even as the coal ministry is going ahead with coal block auctions. But private players are eagerly waiting that the commercial coal mining will be opened for them too. Their hopes have taken wings after the government recently relaxed rules to allow state and central sector PSUs entry into this area.
There is a bill pending in the Rajya Sabha since 2000 to amend the Coal Nationalisation Act of 1976 to open commercial coal mining for the private sector. Meanwhile, the government has made enabling provisions in Coal Mines ( Special Provision) Act for opening the coal sector. Let’s see which legislative option and when the Government pursues. (UNI)
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