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Indian power project
A good and Possible Wind fall gain through Accelerated Depreciation (AD) (CAG will do its job):
many people enjoyed AD benefits 8 years ago through Suzlon, Enercon, NEPC, Vestas wind mills..... many companies or individuals were also wooed to own the wind machines, even today, few people do not know where these machines are ?? Now, the 80% AD in Wind mill is reduced to 35%, thus, no investor or less investors.
But, in solar, due to high project costs, many flocked and deployed their profits and avoided payment of taxes..... Ridiculous thing is :
Assume Rs. 15 Crore is the Profit of an entity
It invests in 5 MW solar pv with equity norm of rs. 3cr/MW (30% equity and 70% Debt) for a Rs. 10Cr/MW project cost. Thus, total equity investment needed is 3 cr x 5 mw = 15 Cr = Profit earned from their existing business.
This corporate based on balance sheet will get funding from EXIM bank etc at a very cheap interest rate ranging from 1.5% to 3% Dollar term, whereas the Rs. 7.5 or 15 or 18/kwh (reliance power got this tariff) calculations as per CERC agrees for an interest rate of 12 to 14% due to Indian Economy condition with a solar pv project cost as 16 cr etc in the 2009 etc. Thus LADDU in both hands for such profit making i.e wind fall gains, which now GERC / GUVNL of Gujarat is asking for tariff reversal.
Indians (Indian Government Exchequer) will loose on:
a). Public land to private people due to such projects, which is adjusted in tax saved on profit and low cost debt fund. International investment companies do not have this benefit (profit earned in their country can't be adjusted due to Accelerated Depreciation guidelines), hence, an automatic debar for International investor and also for the new generation entrepreneurs whose company is new and no profit or no balance sheet.... so, huge tax loss to government....moreover, no LEVEL PLAYING FIELD.
b). No tax collection from Corporate due to account book adjustment of quick amortisation (depreciation is also called amortisation)
c). Very low cost debt fund, but, we keep paying high energy tariff due to CERC guidelines on the interest saved. Please note that new generation entrepreneurs do not have balance sheet, nor access to such low cost fund, but depend on huge SBI interest, hence, an automatic debar.
d). Saving on CAPEX due to imported equipment bought from USA or CHINA due to EXIM bank funding & to promote their country products n services, but, no tariff reduction. The CAPEX shown to win the tariff of 18 or 15/kwh, was Rs. 14 to 16 Cr/MW, but, the solar pv projects were executed around Rs. 10Cr/MW. Hence, Gujarat Government is right in asking due to wrong declaration of CAPEX and hence reduce the tariff by rs. 3.54/kwh from the earlier sanctioned rs. 15/kwh.
e). Please note that few have procured poor quality equipment and are unable to pay debt, but, used the saved project cost to further their existing business, with this low cost debt, which is another LADDU.
f). In Biomass projects, added to these benefits, MNRE paid 30% Capital Subsidy, so the promoters got back the equity in less than 2 years, and enjoyed the debt deployment elsewhere......now out of 500 MW in TN, only 175 MW are working, but, look at the wonderful siphoning of the Equity and low cost debt (who cares to check DPR before release of Subsidy) and now they have put a case in Tribunals that the raw material is not available at cheap rate, hence, not viable, hence, not paying the debt and are asking for more tariff (despite fixed tariff)...... so, SONE PE SUHAAGA.....i.e huge wind fall gains and huge tax loss.
Please be informed that Indian Government has debt defaulters from Airlines, Oil industry, power etc and the total debt NOT PAID is Rs. 2 lakh CRORES !!
For a 26,000 MW of RE Projects (Wind, Biomass, Solar etc all inclusive), the Accelerated Depreciation book adjustment could be around Rs. 137,000 Crores !! i.e that much tax loss due to RE policy on AD. If this is not Wind fall gain, then, what is it?
many people enjoyed AD benefits 8 years ago through Suzlon, Enercon, NEPC, Vestas wind mills..... many companies or individuals were also wooed to own the wind machines, even today, few people do not know where these machines are ?? Now, the 80% AD in Wind mill is reduced to 35%, thus, no investor or less investors.
But, in solar, due to high project costs, many flocked and deployed their profits and avoided payment of taxes..... Ridiculous thing is :
Assume Rs. 15 Crore is the Profit of an entity
It invests in 5 MW solar pv with equity norm of rs. 3cr/MW (30% equity and 70% Debt) for a Rs. 10Cr/MW project cost. Thus, total equity investment needed is 3 cr x 5 mw = 15 Cr = Profit earned from their existing business.
This corporate based on balance sheet will get funding from EXIM bank etc at a very cheap interest rate ranging from 1.5% to 3% Dollar term, whereas the Rs. 7.5 or 15 or 18/kwh (reliance power got this tariff) calculations as per CERC agrees for an interest rate of 12 to 14% due to Indian Economy condition with a solar pv project cost as 16 cr etc in the 2009 etc. Thus LADDU in both hands for such profit making i.e wind fall gains, which now GERC / GUVNL of Gujarat is asking for tariff reversal.
Indians (Indian Government Exchequer) will loose on:
a). Public land to private people due to such projects, which is adjusted in tax saved on profit and low cost debt fund. International investment companies do not have this benefit (profit earned in their country can't be adjusted due to Accelerated Depreciation guidelines), hence, an automatic debar for International investor and also for the new generation entrepreneurs whose company is new and no profit or no balance sheet.... so, huge tax loss to government....moreover, no LEVEL PLAYING FIELD.
b). No tax collection from Corporate due to account book adjustment of quick amortisation (depreciation is also called amortisation)
c). Very low cost debt fund, but, we keep paying high energy tariff due to CERC guidelines on the interest saved. Please note that new generation entrepreneurs do not have balance sheet, nor access to such low cost fund, but depend on huge SBI interest, hence, an automatic debar.
d). Saving on CAPEX due to imported equipment bought from USA or CHINA due to EXIM bank funding & to promote their country products n services, but, no tariff reduction. The CAPEX shown to win the tariff of 18 or 15/kwh, was Rs. 14 to 16 Cr/MW, but, the solar pv projects were executed around Rs. 10Cr/MW. Hence, Gujarat Government is right in asking due to wrong declaration of CAPEX and hence reduce the tariff by rs. 3.54/kwh from the earlier sanctioned rs. 15/kwh.
e). Please note that few have procured poor quality equipment and are unable to pay debt, but, used the saved project cost to further their existing business, with this low cost debt, which is another LADDU.
f). In Biomass projects, added to these benefits, MNRE paid 30% Capital Subsidy, so the promoters got back the equity in less than 2 years, and enjoyed the debt deployment elsewhere......now out of 500 MW in TN, only 175 MW are working, but, look at the wonderful siphoning of the Equity and low cost debt (who cares to check DPR before release of Subsidy) and now they have put a case in Tribunals that the raw material is not available at cheap rate, hence, not viable, hence, not paying the debt and are asking for more tariff (despite fixed tariff)...... so, SONE PE SUHAAGA.....i.e huge wind fall gains and huge tax loss.
Please be informed that Indian Government has debt defaulters from Airlines, Oil industry, power etc and the total debt NOT PAID is Rs. 2 lakh CRORES !!
For a 26,000 MW of RE Projects (Wind, Biomass, Solar etc all inclusive), the Accelerated Depreciation book adjustment could be around Rs. 137,000 Crores !! i.e that much tax loss due to RE policy on AD. If this is not Wind fall gain, then, what is it?
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