NEW DELHI: Power sector does not need any "crutches" in form of tax incentives as it is no longer facing any stress and can stand on its own, Union Power Minister Piyush Goyal has said.
The statement assumes significance in the run-up to the Union Budget as various sectors are seeking tax breaks and other incentives from Finance Minister Arun Jaitley. "I believe that now we don't have to have the crutches of tax incentives. We can stand on our own," Goyal told PTI.
He was replying to a query on whether the Power Ministry will seek any tax incentives for the sector from Jaitley.
"Now the approach has been that my power sector can stand on its own. You have seen that with all transparency we have brought all costs down. Now the stress that is faced by the sector is by and large over," Goyal said.
The Minister further said that the UDAY scheme will itself help save Rs 1.8 lakh crore annually within next three years and the savings will go to the people of India.
The government in November launched Ujwal Discom Assurance Yojana (UDAY) for revival of debt stressed power distribution companies.
The accumulated debt of these companies is over Rs 4 lakh crore and they suffer losses to the tune of over Rs 60,000 crore every year.
Under the scheme, 75 per cent of the debt of these firms will be taken over by the states which would issue bonds to repay the loans. The remaining debt will be repaid by discoms by issuing bonds guaranteed by states.
According to energy expert C P Krishnan, the power generating companies have been getting better tax incentives, but the issue is with discoms' debt.
The cash strapped discoms are not able to buy power which is the main reason for generators running their plants at lower plant load factor as electricity cannot be stored, he said.
He was of the view that states have been giving subsidised or free power to certain category of consumers like farmer but they did not pay the discoms which resulted in mounting debt year after year.
However, he expressed hope that Centre may bring out some models of innovative financing for clean energy or other power projects to further boost the sector.