Feb 24 2011
India plans on using a portion of the $555 million (25 billion rupees) it has raised as coal tax for funding new electricity transmission lines, which would distribute the power generated from clean energy projects.
The Chairman of the Central Electricity Regulatory Commission, Pramod Deo, has revealed that the Ministry of Finance was thinking out plans for doling out the money to states that do not possess the necessary infrastructure for conveying the power generated from the renewable energy plants. Deo also mentioned that this money would be used to provide finance to those states, which need to develop transmission networks to wind farms, solar plants and also to other clean tech projects that are being constructed.
Jairam Ramesh, the Environment Minister, has stated that India has for the very first time charged companies, which use fossil fuel with a coal, peat and lignite tax effective from 1st July, and in the first year would raise 25 billion for the clean energy projects. The Chairman of the Central Board of Excise and Customs, Sumit Dutt Majumder has refused to comment on the amount of funds that have been raised. He remarked that Finance officials were all silent and tight lipped before the budget announcements on 28th February. Despite announcing the coal tax during the budget proceedings of the previous year, the government had yet to give details about the allocation of funds.
According to Himraj Dang, the Director of environmental investments of a Hong Kong private equity firm, the Olympus Capital Holdings Asia, one major hurdle faced in India is the lack of a strong nationwide utility, which hampers the development of renewable energy projects and may also deter Investors. Deepak Gupta, who is the Secretary at the Ministry of New and Renewable Energy, has commented that this issue was very vital and that the central government must look into it. According to him, the money should be given from the clean energy fund.
The International Energy Agency has disclosed in September that the transmission network in India provides electricity to only one person out of three, which is a major barrier to the growth of the economy in India. The tax imposed on domestic and imported coal is Rs 50 a metric ton, which the coal producers need to pay on a monthly basis as per the rules stated by Coal India, which is the largest producer of coal in the nation. Some portion of the fund could also be given to the states as encouragement for them to set higher targets for renewable energy.
Source: Central Electricity Regulatory Commission of India