New Delhi/Mumbai: Finance minister Arun Jaitley announced a series of measures in Budget 2017-18 to promote clean energy, access to power and energy security, that will result in 20 gigawatts (GW) of solar capacity addition, higher spending on rural electrification, two new strategic oil reserves and lower import duty on liquified natural gas (LNG) and items used in making solar cells and panels.
In his budget speech, Jaitley said full electrification of 18,452 villages identified in 2015 will be achieved by 1 March 2018, for which Rs4,814 crore will be spent in the next financial year, a 43%jump from what is estimated to have spent this fiscal. Of this, so far, close to 12,000 villages have been electrified.
Jaitly announced setting up of 20 GW of solar power capacity and feeding 7,000 railway stations with solar power, giving a major impetus to the shift to clean energy. Over the last two years, the share of solar power in the county’s energy mix has been gradually increasing, while that of thermal power has been declining. As on 31 December, thermal power capacity accounts for 69% of the country’s 310 gigawatt (GW) power generation capacity, while solar power account for 2.7%.
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“Solar energy, with the help of government policies and the falling global prices, is now at an inflection point where it can compete on its own against other forms of energy,” said Sanjeev Aggarwal, managing director and chief executive of Amplus Energy Solutions Pvt. Ltd.
Two new strategic oil reserves announced will be built in Odisha and Rajasthan, Jaitley said. India has already built underground crude oil storage capacities at three locations—Vishakhapatnam, Mangalore and Padur with a total 5.3 million tonne capacity. The facility at Vishakhapatnam has already been filled up and half of the Mangalore storage facility has been filled. India in January signed a deal with the United Arab Emirates for filling the rest of the facility at Mangalore. The idea is to have enough oil reserves in case of any disruption in crude oil supplies to the country in the event of any geopolitical tension. Oil refiners like Indian Oil Corp. have inventory sufficient to meet three weeks of demand.
Jaitley also cut import duty on LNG from 5% to 2.5% and on solar tempered glass that goes into manufacturing of solar cells, panels and modules from 5% to zero. Also, materials that go into making such glass will now attract countervailing duty at 6% compared to 12.5% earlier. Machinery used in generating power using natural gas without combustion employing fuel cell technology has also been given import duty relief with the idea of promoting clean energy use in the economy.
Dev Arora, founder & chief executive officer of 8minutes Future Energy Pvt Ltd, a solar power company said the move to reduce import duty on solar tempered glass will help improve cost efficiency in manufacturing of key solar equipment like solar cells, panels and modules and enable companies to reduce capital costs, which will ultimately benefit the consumer.