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There is a dire need to bridge the yawning gap between government words and actions. Exuberance expressed by government on success of solar bidding and falling solar tariffs would be short lived unless structural issues are addressed on priority, said Shirish M. Navlekar, Joint Managing Director and Chief Financial Officer, Mytrah Energy (India) Private Limited.
He said the upcoming Union Budget should focus on stricter policy implementation for Renewable Purchase Obligations (RPO) fulfillment by stakeholders.
“While UDAY scheme is widely expected to bring relief to the ailing discoms, lack of will to truly implement on part of various state governments is a cause of deep concern and deliberate attempts by a few state government officials to discriminate renewable players are frightening,” he said.
He said payment priority for renewable independent power producers and a stern action for delays in payments need to be contemplated against the discoms and their officials.
Navlekar said there should be continuation of certain incentives like GBI, 80-I tax exemptions and added that there needs to be changes and relaxation in Company Law especially for infrastructure sector where there is a holding company and a number of operating special purpose vehicles implementing different projects.
“The new Companies Act 2013 unnecessarily obligates and burdens the SPVs to have various KMP and other compliances just because of size of their capital exceeding the minimum threshold,” he said.
Stressing on the need of debt financing, he said dependence on banks is highly undesirable and newer and more appropriate matching avenues need to be made available.
“Insurance and pension sectors are best suited to meet the long tenor funding requirements of infra sector, however deprived due to their own regulatory framework of funding only AA rated entities which infra sector can never achieve on a standalone basis. Some of the large PSU sector specific funding agencies (PFC, REC) are knotted in their policies emerging from funding conventional power sector projects which are not suitable for the renewable sector,” he said.
He said Goods and Services Tax (GST) rate on renewable project equipment and all components should be zero and service components should have minimum levy of not more than 2-4 per cent.
“The present tax systems and procedures are extremely complex besides there is a greater element of hostility from the tax officials towards corporates which is driven by their ‘targets’ for tax collection,” he said. He added that a strict penalty mechanism needs to be devised against such deliberate and frivolous demands.
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