Low utilisation proves dear for power ministry

The power ministry has seen a drastic cut in Budget allocations from last year's Budget estimate (BE) of Rs 3,600 crore to Rs 3,000 crore in 2005-06.

The cut has been imposed on account of low utilisation in 2004-05, when the ministry managed to use only Rs 2,400 crore ""two-thirds of its budgeted amount.

There has been a sharp cut in the allocation for the Accelerated Power Development and Reform Programme (APDRP) which had been allotted Rs 3,500 crore (BE) last year.

In 2004-05, only Rs 1,700 crore (RE) of this was used and the allocation for next year has been kept at a mere Rs 630 crore. The programme is currently being evaluated by independent agencies.

The government has also not allotted anything for rural electrification, but provided Rs 1,100 crore for a new programme on household electrification for 2005-06.

Allocations for both these programmes have been made under the Ministry of Finance, which will provide money to states on the recommendation of the power ministry.

The government has budgeted for a steep hike in internal and extra budgetary resources (IEBR) from Rs 11,641 crore (RE) 2004-05 to Rs 18,914 crore (BE) in 2005-06.

The biggest increases are expected from National Thermal Power Corporation, which will generate Rs 8,550 crore, followed by Power Grid Corporation (PGCIL), which is slated to generate Rs 4,368.25 crore in 2005-06, as against the IEBR of Rs 3234.8 crore (RE) last year.

A budgetary support of Rs 1,306.60 crore will be provided to National Hydro Electric Power Corporation (NHPC) as against the RE of Rs 728 crore last year. The BE for 2004-05 was Rs 1,142 crore. PGCIL will also get a budgetary support of Rs 419.4 crore, up from Rs 179 crore (RE) this fiscal.

In addition, projects and schemes for the development of the Northeast and Sikkim by public sector units will get a budgetary support of Rs 419.4 crore as against the RE of Rs 778.5 crore and BE of Rs 300 crore in 2004-05.

While no specific tax proposals of the ministry have been agreed to, the reduction in peak corporate tax, for instance, is estimated to benefit NTPC alone, by around Rs 200 crore a year.

However, the 15 per cent rate for initial depreciation on new assets will increase tax on ongoing power plants where no new additions are taking place.