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Budget 2019: Govt plans to announce structured reforms in power tariff policy

FE Bureau
Union Budget 2019 India, Budget 2019-20

Budget 2019 India: The Government's continuing focus on household electrification, coupled with a significant boost for railways, urban railway and metros and measures proposed for greater deployment of Electric Vehicles (EVs), are likely to improve energy demand in the country. This, taken together with the focus on utilisation of stranded gas-based assets, is a positive for gencos. Schemes to boost domestic manufacture of solar power-related equipment and materials and storage devices will enable better integration of renewables in the energy mix through battery storage.

The reduction in customs duty for fuel and parts used to set up nuclear power projects will improve the cost competitiveness of nuclear energy and benefit the consuming utilities, while higher budgetary allocation in FY2020 for schemes like DUGJY and IPDS is likely to help discoms reduce losses in their licence areas. The budgetary allocation for the renewable energy sector in FY2020 will help meet its funding requirements, including that for building a green energy transmission corridor.

The GoI intention to closely work with states to improve the financial position of discoms is also a positive development for the sector. Further, the GoI intends to carry out significant tariff reforms, including those pertaining to open access charges, to create a more competitive marketplace. With large funding requirements and significant focus on the renewable sector, measures proposed for deepening the corporate bond market also remain positive for the power sector.

Impact: PositiveC