Private power generating companies seek sops on electricity export

Privately-owned power generating companies (gencos) have requested the Centre to provide relaxations on duties and provide incentives for exporting electricity to neighbouring countries.

Citing strategic advantage over China, the gencos have asked the Centre to consider influence over neighbouring countries through energy exchange. 

The Association of Power Producers (APP), the representative body of private gencos, has written to the ministry of commerce and industry asking for concessions to make electricity export from India competitive.

“Given the massive size and scale of our power grid and the fact that we are centrally placed among the South Asian countries, there exists high potential for significantly enhancing our electricity exports, especially thermal power, to our neighbouring countries. This will allow India to strengthen its strategic position in the region, thus countering China’s increasing influence,” said the letter to the secretary, ministry of commerce & industry and the Directorate General of Foreign Trade (DGFT). Business Standard has reviewed a copy of the letter.

In 2018, the Union ministry of power had issued guidelines for import/ export of electricity and provided a policy framework for cross-border electricity trade. The guidelines said for the export of coal-based power, only imported coal or spot e-auction coal or coal obtained through commercial mining would be used.

APP in its letter noted that India’s potential to export base load power is rendered uncompetitive due to imposition of significant taxes and duties on coal used as input for power generation.

“By providing exemption on applicable GST & GST compensation cess and the Customs Duty (on imported coal), there is an avenue for reduction in cost of power for export by over US Cents 0.50/kwh. To make electricity exports further competitive, concessions on Indian transmission charges may also be offered. By offering a 50 per cent discount in Indian transmission charges, exports can be made competitive by around US Cents 0.19/kwh,” the association said in its letter.

It said the exemptions provided by the Centre would be offset by the foreign exchange earnings made by the gencos through export of power.

India has a power production capacity of 375 Gw, while the peak demand is close to half at 184 Gw, which renders surplus capacity unused. APP has asked that this surplus capacity can be used to export power.

The power sector of most of India’s neighbouring countries is characterised by either high dependency on hydro power or on costly liquid fuel sources. “India’s neighbouring countries need access to reliable and cost-effective base load power, which is round-the-clock and not affected by seasonality. The inadequacies and inefficiencies in the power systems of neighbouring countries provide India with significant opportunity to export thermal power for resultant strategic as well as economic benefits,” said the letter.