Generous outlay, but bumps remain for roads
The Centre’s infrastructure outlay, especially for the road sector, continues to improve. First, the government has budgeted ?64,900 crore to be spent in 2017-18, which is about 24 per cent higher than the revised estimate for 2016-17. Secondly, to facilitate an increase in coastal trade, it plans to add close to 2,000 km of coastal roads. The total allocation budgeted for the rural road programme, however, stands flat compared to last year, at ?19,000 crore. The Background Over the past one year, roads got built at a robust rate — from around 10 km per day at the start of the year to about 18 km per day by the end of the year. Despite this, the Centre may fall well short of the 10,000 km national highway target planned for this fiscal, with only 5,700 km bid out for construction till the end of December 2016. Unlike last year, when most of the road projects were built using pure construction contracts — in Engineering, Procurement and Construction (EPC) format — this year saw close to 30 per cent of the projects bid out using the Hybrid Annuity Model (HAM) contract. HAM is a mix where a road project is built 40 per cent through EPC format and while the other 60 per cent through the Build Operate Transfer – Annuity model. But, the worrying sign is, that increasingly EPC projects are bid at a cost that doesn’t cover the government’s estimate for the project. A similar case of aggressive bidding is also witnessed in HAM projects. The Verdict With banks reeling under increasing levels of non-performing assets from the infrastructure industry, they will be averse to lend further — especially to highly-leveraged road construction players. Moreover, only 25 per cent of the HAM projects till end of December 2016 have reached financial closure. However, with increased allocation by the government for roads, orderflow for companies will continue to be robust. The key beneficiaries include IRB Infrastructure, Ashoka Buildcon, L&T, Sadbhav Engineering, IVRCL, MEP Infrastructure and NCC. The next round of reforms for the road sector depends on how well the Investment trust (Inv-IT) model is accepted by investors, and how well the implementation of the Toll Operate and Transfer (TOT) model (that is, long-term leasing of operational projects) is carried out by the Centre. Besides, the issue of stalled projects and the effectiveness to release project funds stuck under arbitration with government bodies still needs to be watched Donald Trump Womens Jersey
Petroleum Minister welcomes the Budget 2017 -18 proposals to boost Oil and Gas Sector
Minister of State (I/C) for Petroleum and Natural Gas, Shri Dharmendra Pradhan welcomed the Budget 2017-18 proposals announced by Union Minister for Finance and Corporate Affairs, Shri ArunJaitley in the Parliament today. Budget 2017-18 aims to Transform the quality of governance and quality of life, Energise various sections of society and Clean the country from the evils of corruption and black money. With an aim to give a fillip to Oil and Gas Industry, the Finance Minister announced several measures in Budget 2017 -18. The key initiatives include: 1. Reduction in the basic customs duty on LNG from 5% to 2.5%. 2. Setting up of two more strategic oil reserves at Chandikhole in Odisha and Bikaner in Rajasthan to enhance country’s energy security taking our strategic reserve capacity to 15.33 MMT. This will increase our storage capacity to meet the consumption requirement of about 90 days which is at par with the international benchmarks. 3. Foreign companies shall not be liable to tax in India in case of sale of leftover stock of crude oil in case of strategic petroleum reserve after the expiry of agreement or the arrangement, subject to fulfilment of certain conditions. 4. Creation of an integrated public sector ‘oil major’ to integrate the oil sector PSUs across the value chain and to enhance capacity of Oil PSUs to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders. 5. Encouraging digital payments through creation of digital payment infrastructure across all fuel stations by setting up facilities for digital payments including BHIM app. The Finance Minister has also praised the Direct Benefit Transfer scheme for LPG and kerosene of the Ministry of Petroleum and Natural Gas which is underway across states in his Budget speech. Alexander Kerfoot Womens Jersey
Union Budget 2017: Big infrastructure push to spur growth
The Union Budget has allotted a lion’s share of Rs 3.96 lakh crore for infrastructure development, terming it as a top priority area for the government. Finance minister Arun Jaitley on Wednesday said the magnitude of investment in the space is bound to spur growth. Terming railways, roads and rivers as the “lifeline” of the country, the finance minister while presenting the Budget for 2017-18, said, “Total allocation for infrastructure stands at a record level Rs 3,96,135 crore in 2017-18.” The allocation for infrastructure in 2016-17 Budgetary estimate was Rs 3,48,952 crore which was revised to Rs 3,58,634 crore. “This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities,” he said. He enhanced the allocation for highways sector by 12 per cent to Rs 64,900 crore for 2017-18. Highways sector, which has been one of the priority areas of the government, had a budgetary estimate of Rs 57,976 crore for this fiscal, which was revised to Rs 52,447 crore. “In the road sector, I have stepped up the Budget allocation for highways from Rs 57,976 crore in budgetary estimate 2016-17 to Rs 64,900 crore in 2017-18,” Mr Jaitley said while tabling the Budget. The Budget has a significant focus on the airports development, with the finance minister informing that a select few airports from tier-II cities will be developed through the public-private partnership mode. In addition to this, a new Metro rail policy will also be on the anvil, which will focus on innovative models of financing such projects and their implementation. The finance minister noted that infrastructure was the thrust area of the government for efficiency, productivity and quality of life and approach was to spend more on infrastructure development. Terming the Budget as a “revolutionary Budget” in the history of India, road transport, highways and shipping minister Nitin Gadkari said infrastructure space has been a major beneficiary of the budget and accordingly government is giving topmost priority in developing the sectors be it highways, waterways or multimodal hubs. He said work worth Rs 4.71 lakh crore is already on in the sector and pace would be accelerated to augment highways, waterways and shipping sectors adding that a massive Sagarmala project for port-led coastal economic development is already underway. Mr Jaitley further said the World Bank is more optimistic and has projected a GDP growth of 7 per cent in 2016-17, 7.6 per cent in 2017-18 and 7.8 per cent in 2018-19. “…This pick up in our economy is premised upon our policy and determination to continue with economic reforms, increase in public investment in infrastructure and development projects,” the finance minister said. “Railways, roads and rivers are the lifeline of our country. I feel privileged to present the first combined Budget of independent India that includes the railways also. We are now in a position to synergise the investments in railways, roads, waterways and civil aviation. For 2017-18, the total capital and development expenditure of railways has been pegged at Rs 1,31,000 crore. This includes Rs 55,000 crore provided by the government,” he added Mr Jaitley said for transportation sector as a whole, including rail, roads, shipping, a provision of Rs 2,41,387 crore has been made in 2017-18. Thomas Morstead Womens Jersey
Budget 2017: An opportunity lost for renewable energy
India has an ambitious target of 175 gigawatts (GW) of solar, wind and other renewable energy by 2022. The financial needs are mammoth and India needs to look beyond fiscal allocations if the signals for clean energy have to be bold and consistent. Solar, alone, would require $100 billion in debt to reach 100 GW. International debt markets, estimated at $95 trillion, are the world’s largest pool of capital and need to be made accessible to Indian developers at affordable cost. The budget must be evaluated against this scale of need and opportunity. The role of public funds should be to either catalyse action, attract investment, or underwrite risk. Let us first examine fiscal priorities to catalyse action. Compared to last year (Rs5,036 crore), this year the allocation to the Ministry of New and Renewable Energy stands at Rs5,473 crore. As much as 74% of the outlay is directed to grid-interactive renewables, specifically mentioning the second phase of solar park development for 20 GW of capacity. The total budget is further split between Rs3,361 crore for solar and only Rs408 crore for wind, a clear indication that the government will continue to prioritise solar. Additionally, the budget extends support to power 2,000 railway stations through solar, under the Indian Railways 1GW solar mission. Smaller sums of Rs135 crore and Rs76 crore have been earmarked for small hydro and bio-power, respectively. Despite recent suggestions, large hydro remains outside the purview of renewable energy. One continuing area of uncertainty is the role of the National Environment Fund (NEF). The cess on coal remained unchanged at Rs400/tonne. While the total cess collected (projected up to 31 March 2017) was a mammoth Rs54,336 crore, only Rs25,810 crore have been transferred to NEF. Of this, under half (Rs12,427 crore) has been spent on renewable energy projects. While nearly all of the budgetary allocation to renewables in 2017-18 will be from NEF, the budget could have clarified the proportion of the cess that would be transferred to NEF. Another uncertainty is how the goods and services tax (GST) will impact renewables. Researchers at the Council on Energy, Environment and Water (CEEW) find that if solar components were categorised based on current levied tax rates (including exemptions and subsidies), GST would impact solar tariffs minimally. However, if preferential tax benefits to renewable energy were not accounted, then GST could raise utility scale solar tariffs by as much as 9.5%, hampering progress. How has the budget performed in attracting new investment? Two market opportunities stood to gain significantly from strategic budgetary support. First, residential rooftop projects could create 15 GW of renewable energy capacity in India by 2022. While budgetary support was extended for housing infrastructure, no direct support was announced for rooftop solar. Secondly, replacing 15% of India’s irrigation pumps with solar pumps could build 20 GW of capacity. Aiming to double farmer incomes within four years, the budget discusses mainstreaming and interlinking Primary Agriculture Credit Societies with District Central Cooperative Banks. If this increases access to low-cost loans, the incentive to invest in the upfront capital expense for solar pumps could increase. The budget’s real test lay in its approach to mitigating financial risk in the renewable energy, where capital costs are high, payback periods are long and off-taker, construction and foreign exchange risks raise cost of debt significantly. CEEW research shows that 70% of the costs embedded in already low solar tariffs owe to return on equity and debt servicing. But no budgetary support was extended to any agency to address risks. Moreover, financial support to the Solar Energy Corporation of India, the nodal agency for commissioning many solar and wind projects, has been halved to Rs50 crore. Nor has the budget given any impetus to technology development. Only Rs144 crore has been budgeted for research and development, nearly half of last year’s allocation. A recent CEEW study showed that energy storage has a number of current commercial applications for telecom towers, petrol pumps, commercial establishments, rural ATMs, and academic institutions. Yet, funding remains constrained. In 2016-17 Rs 20 crore was allocated for developing, testing and deploying energy storage technologies. In 2017-18 there is no allocation for energy storage, which could exacerbate challenges with integrating renewable energy into the grid. Again, despite some focus on transport infrastructure, no allowances have been made for electric vehicles or biofuels. While total budgetary outlay to renewable energy marginally increased, there is little to celebrate. This budget is unlikely to catalyse action, attract private investment or underwrite risks. An opportunity was lost. Riley Sheahan Womens Jersey
Jaitley gives big push to multi-modal logistics
The Finance Minister has stressed on the need to have an effective multi-modal logistics and transport sector, which will make the economy more competitive. “A specific programme for development of multi-modal logistics parks, together with multi-modal transport facilities, will be drawn up and implemented,” Arun Jaitley said. “For the transportation sector as a whole, including rail, roads, shipping, the Finance Ministry has proposed ?2,41,387 crore in 2017-18. This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities,” he added. Railways, on its part, will implement end-to-end integrated transport solutions for select commodities through partnership with logistics players, who would provide both front and back-end connectivity. Rolling stocks and practices will be customised to transport perishable goods, especially agricultural products, Jaitley added. He further said a new Metro Rail Policy will be announced with focus on innovative models of implementation and financing, as well as standardisation and indigenisation of hardware and software. This will open up new job opportunities for our youth, he said. A new Metro Rail Act will be enacted by rationalising the existing laws. This will facilitate greater private participation and investment in construction and operation of the metros. Referring to the merging of the Railway Budget with the main Budget, the Finance Minister said the move would facilitate multi-modal transport planning between railways, highways and inland waterways. “The functional autonomy of Railways will, however, continue. This will give us a holistic view of allocations for sectors and ministries. This would facilitate optimal allocation of resources,” he said. Pirojshaw Sarkari, CEO, Mahindra Logistics, said the construction of PMGSY roads will be accelerated to 133 km per day in 2016-17, against an average of 73 km during 2011-2014. This will ensure expansion of logistics activities to the under-penetrated rural areas nationwide. The restructured scheme focused on export infrastructure namely Trade Infrastructure for Export Scheme will provide further growth opportunities to the logistics sector, he added. Sam Acho Womens Jersey
Cheaper renewables to halt coal and oil demand growth from 2020 -research
The falling cost of electric vehicle and solar technology will halt demand growth for oil and coal from 2020, according to research published on Thursday, posing a threat to fossil fuel companies unprepared for the transition. The Grantham Institute at Imperial College London and independent think tank Carbon Tracker Initiative analysed cost forecasts for electric vehicle (EV) and solar photovoltaic (PV) technology, government policies and the impact on road transport and power markets, which account for half of global fossil fuel consumption. “Fossil fuels may lose 10 percent of market share to PV and EVs within a single decade. This may not sound much but it can be the beginning of the end once demand starts to decline,” Carbon Tracker said in a statement. A 10 percent loss of market share caused the collapse of the U.S. coal mining industry and Europe’s five biggest utilities lost more than 100 billion euros ($108 billion) in value from 2008-2013 because they were unprepared for renewable energy growth, it added. The report said that electric vehicles could make up a third of the world’s road transport market by 2035 and that solar PV could supply 23 percent of global power generation by 2040, entirely phasing out coal and leaving natural gas with only a 1 percent market share. Growth in the number of electric vehicles could lead to 2 million barrels per day (bpd) of oil demand being displaced by 2025, the report estimates. That would be similar to the volume of oversupply that led to the 2014/15 collapse in oil prices. By 2040, 16 million bpd could be displaced, rising to 25 million bpd by 2050, it said. The International Energy Agency has said that 2 million bpd of oil could be displaced by electric vehicles by 2040. Bloomberg New Energy Finance has forecast that such displacement could occur as early as 2028. MISPLACED CONFIDENCE? “Coal demand could peak in 2020 and fall to half of 2012 levels by 2050. Oil demand could be flat from 2020 to 2030 then fall steadily to 2050,” Thursday’s report said. By contrast, the International Energy Agency said this week it does not expect oil demand to peak any time soon. Last week BP said that it expects global oil demand to continue growing into the 2040s, citing increased plastics consumption, while U.S. peer ExxonMobil has said that it sees fossil fuels meeting almost 80 percent of global energy needs by 2040. “Oil majors already do scenario analysis but, as Exxon previously indicated, they do not assign sufficient probability to a rapid (low-carbon) transition,” said James Leaton, head of research at Carbon Tracker Initiative. “There appears to be a desire to justify business-as-usual at some companies, which does not constitute sound risk management.” Several studies have warned investors that measures to curb carbon emissions growth will hit earnings at coal, oil and gas companies as the world shifts to cleaner energy. Low oil prices over the past couple of years have also forced companies to reduce spending and shelve deals on oil and gas fields. Jermaine Jones Jersey
FM Arun Jaitley hikes highways allocation by 12 per cent to Rs 64,900 crore in Budget 2017
Terming roads, railways and rivers as the “lifeline of our country”, Finance Minister Arun Jaitley today enhanced the allocation for highways sector by 12 per cent to Rs 64,900 crore for 2017-18. Highways sector, which has been one of the priority areas of the government, had a budgetary estimate of Rs 57,976 crore for this fiscal, which was revised to Rs 52,447 crore. “In the road sector, I have stepped up the Budget allocation for highways from Rs 57,976 crore in BE (budgetary estimate) 2016-17 to Rs 64,900 crore in 2017-18,” Jaitley said while tabling the Budget. “Railways, roads and rivers are the lifeline of our country,” he said. Road Transport and Highways Minister Nitin Gadkari said the Budget will give a big boost to infrastructure sector, specially highways. He said highways sector continues to be a focus area for the government and announcements of multi-modal logistics parks and multi-modal passenger stations will be a game changer. Presenting the Budget, Jaitley said the total length of roads, including those under PMGSY (Pradhan Mantri Gram Sadak Yojna), built from 2014-15 till the current year is about 1,40,000 kms, which is significantly higher than previous three years. Besides, 2,000 kms of coastal connectivity roads have been identified for construction and development. “This will facilitate better connectivity with ports and remote villages,” he said. The minister said the pace of construction of PMGSY roads has accelerated to reach 133 km roads per day in 2016-17, as against an average of 73 km during the period 2011-2014. “We have also taken up the task of connecting habitations with more than 100 persons in left wing extremism affected blocks,” Jaitley said, adding, “We have committed to complete the current target under PMGSY by 2019.” An allocation of Rs 19,000 crore in 2017-18 has been provided for this scheme. Together with the contribution of states, an amount of Rs 27,000 crore will be spent on PMGSY in 2017-18. Marshawn Lynch Authentic Jersey
Budget gives a big leg-up to infrastructure industry: Experts
The infra industry has hailed the added focus the sector has received in the Budget, saying the proposals will give a big boost to this key growth driver. The Budget has allocated Rs 3.96 trillion to infra sector to spur economic activities and create more jobs and has also accorded infrastructure status to affordable housing projects which will give lot of tax incentives to the players. “The Budget augments the already established mode of using budgetary spend to boost infra segment. Integrated transportation focus, including railways, metros, multi-modal transport, highways, is transformational that can take growth into the next orbit,” KPMG India’s Manish Aggarwal said. For the transport sector as a whole, including railways, road, shipping, the Government has made a provision of Rs 2.41 trillion in 2017-18. “It is also noteworthy that Railways has been given due importance with a total outlay of Rs 1.31 trillion out of which Rs 55,000 crore is committed from the Budget. “There is clear focus on rail safety with a national rail safety fund with a corpus of Rs 1 trillion for five years and passenger convenience through station redevelopment,” said Deloitte Touche Tohmatsu India’s Vishwas Udgirkar. For highways, the budget allocation has been stepped up to Rs 64,000 crore from Rs 57,676 crore, he noted. “In the aviation sector, select airports in tier-II cities have been proposed for development through PPP mode which will complement the regional connectivity plans. “The Airports Authority of India Act will be amended to enable monetisation of land assets and unlock their value. But ports and shipping, one of the focus areas of the government, is a surprise omission in the Budget,” he said. Centrum Infra Advisory’s Sandeep Upadhyay said, “Within the infra sector the focus continues to be on pushing capex in transportation sector with major impetus for the Railways. But the pace of rolling out infra projects including the need of single-window clearance and reforming PPP framework and dispute resolution with contractors are where the authorities really need to focus on.” Essar Ports’ Rajiv Agarwal said measures including those in respect of public infra spending, rural spending and tax cuts will help increase consumption and help fasten growth The FM has also accorded infra status to affordable housing segment which is likely to boost the sector. “The Budget provisions will have several spin-off benefits. Granting infra status and higher fund allocation for affordable housing (Rs 23,000 crore) is a welcome step,” IMC’s Deepak Premnarayen said. Charles Mann Authentic Jersey
Budget brings lower indirect levies for clean energy equipment
Giving a boost to clean energy programme, Finance Minister Arun Jaitley today proposed massive cuts in excise and customs duties on materials used in solar and wind plants, and also announced the second phase of solar park development for 20 GW capacity. “In solar energy, we now propose to take up the second phase of Solar Park development for additional 20,000 MW capacity,” Jaitley said while presenting the Budget for 2017-18 in the Lok Sabha today. Besides, the minister also proposed to feed about 7,000 stations with solar power in the medium term saying that a beginning has already been made in 300 stations and works will be taken up for 2,000 railway stations as part of 1000 MW solar mission. Commenting on the budget proposals about renewable energy, Power Minister Piyush Goyal told PTI that his ministry would soon start auction for another 20GW of solar parks in the country as announced in the Budget. The Finance Minister has proposed zero basic customs duty (BCD) on solar tempered glass for use in manufacture of solar cells/panels/modules. At present BCD on those is 5 per cent. Similarly, he proposed to reduce countervailing duty (CVD) on parts/raw materials for manufacture of solar tempered glass for use in solar photovoltaic cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications, to 6 per cent from existing 12.5 per cent. The budget has also proposed to reduce excise duty on these materials to 6 per cent from existing 12.5 per cent. It is also proposed to reduce the BCD, CVD and SAD(Special Additional Duty) of 24 per cent on resin and catalyst for manufacture of cast components for Wind Operated Energy Generators to 5 per cent. Budget has also proposed zero excise duty on these materials from existing 12.5 per cent. All items of machinery required for fuel cell based power generating systems to be set up in the country or for demonstration purposes attract BCD, CVD and SAD of 30 per cent which would be reduced to 11 per cent. The budget has proposed to reduce excise duty on these items to 6 per cent from existing 12.5 per cent. Similarly, it is proposed to reduce BCD, CVD and SAD of 30 per cent on all items of machinery required for balance of systems operating on biogas/bio-methane/ by-product hydrogen to 11 per cent. The budget has also proposed to reduce excise duty on these materials to 6 per cent from 12.5 per cent. However, it is proposed to levy 6 per cent excise duty on solar tempered glass for use in solar photovoltaic cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications. At present there is no excise duty on these materials. India has set an ambitious target of adding 175 GW of renwable energy by 2022 which includes 100 GW of solar, 60 GW of wind, 10 GW from biomass and 5 GW from small hydroelectric projects (upto 25 MW each). Nellie Fox Womens Jersey
Power tariffs may rise marginally as tax holiday expires
Power tariffs for plants set up after March 2017 could increase by 5-10 paise per unit as a tax holiday on infrastructure projects, including power, has been discontinued. Ratul Puri, chairman of Hindustan Powerprojects, said, “While new thermal power projects will see comparatively higher tariff hikes, solar power projects would see a minimal effect. The maximum rise could be 10 paise per unit.” In its Finance Bill, the government on Wednesday said the 80-IA tax holiday will be discontinued from April 2017, disappointing a segment of solar power developers who were expecting extension of this clause. Jasmeet Khurana, associate director at Bridge to India, a renewable energy analyst firm, however, estimated a higher impact on solar power generation. “Earlier, companies were expecting an extension of the tax holiday and had made representations to the government. We are expecting solar generation costs to go up by 20-30 paise per unit,” he said. Puri said, “Nevertheless, by providing infrastructure status to the housing segment, the government has given a further impetus to address suppressed power demand which is critical to providing 24X7 power to all. In the renewable energy sector, the government’s commitment to add another 20 GW of solar capacity would help the country achieve 100 GW of solar by 2022. The year 2017-18 will be a hallmark year, as the country gears itself to install the maximum ever MW in its history.The journey from MW to GW is well and truly happening.” Santosh Kamath, partner and head of renewables at KPMG in India, said, “The expected fall in interest rates as a result of demonetisation and prudent fiscal management will also contribute positively to the renewable energy sector.” Gagan Vermani, CEO of MYSUN said, “The target to build 1 crore new homes should mandate usage of a 1KW solar system per home, as each of these homes will need power. That itself will add 10GW of rooftop solar. Enhancement of the carry forward duration of MAT from 10 years to 15 years and the rationalisation of corporate tax for companies with a turnover of less than Rs 50 crore would lead to increased profits for a lot of small solar installers, which could potentially lead to passing on of some of this benefit to the end users, effectively reducing solar system prices.” Anil Chaudhry, country president of Schneider Electric India, said, “Today’s budget gave a clear indication of the government’s focus to achieve ‘sustainable energy for all’, with two of its critical steps; firstly, by providing a boost to rural electrification with a 25% increase in the outlay for key power schemes like Integrated Power Development Scheme and Deen Dayal Upadhyaya Gram Jyoti Yojna. This is expected to fast-track the rural electrification drive of the government, which is now planned to be completed by May 1, 2018. Secondly, by strengthening its focus on renewable energy forms with the inflow of another 20 GW in the next fiscal. “This, however, will require investments in grid management and digitisation of the grid to ensure supply of quality reliable and safe power. It is important to stress that along with rural electrification, it is equally important to provide reliable and quality power, which requires investments towards modernisation of the country’s transmission and distribution power networks and use of digitisation in grid management,” he said. Larry Bird Jersey