India to Use Part of Coal Tax to Improve Power Transmission

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Mar. 3 – The Indian government is considering spending part of its estimated Rs.25 billion-coal tax revenue on new power transmission lines, to help power distribution to every state from the clean energy projects.

India started to levy Rs. 50 on every ton of both imported and domestically mined coal, lignite and peat on July 1 last year. According to the Minister of Environment and Forests Jairam Ramesh at the time, the government was planning to utilize the fund for the development of green energy projects, in order to push the Indian economy towards a low-carbon future.

In a February 22 Times of India interview with Pramod Deo, chairman of the Central Electricity Regulatory Commission, Deo said India is considering a project to fund those states that lack the infrastructure to transfer the power from the renewable-energy plants being built, in order to improve the inadequate, inefficient and low-quality national grid system.

The lack of power transmission facilities is the biggest challenge facing the developing clean energy projects, the growing private investment and people’s improving living standards. A World Bank report shows that 50 percent to 60 percent of Indian firms depend on captive generation to meet their power requirements compared to its neighbor China with less than 20 percent of such businesses. India’s per capita electricity consumption still stays as low as 540 units per capita compared to China’s approximate 1,000 units. A significant number of people do not even have access to electricity, while the rest with the access have to endure high costs and poor service.

The government also plans to use part of the fund to increase the use of clean energy. According to Deo, India will be giving financial incentives to those states lacking wind or solar potential, in order to help them meet the target for every state that distribution utilities and major industrial companies who generate their own power source 0.8 percent to 14 percent of their supplies from renewable sources.