The government’s collections from the clean environment cess imposed on coal, lignite and peat in 2010 are likely to touch Rs 54,336 crore by March, according to a finance ministry document.
However, only Rs 9,021 crore, or about 17% of the expected total, has been spent through the National Clean Energy Fund (NCEF) to which Rs 25,810 crore has been transferred from the amount collected.
The spending falls short of the estimated Rs 34,811 crore needed to subsidise some 55 renewable energy projects, as recommended by an inter-ministerial group. Funds from the cess are routed through the NCEF to finance and promote clean energy initiatives and research & development. The inter-ministerial group decides how the money is to be used.
According to a government statement, about Rs 9,021 crore has been spent through NCEF although Rs 17,500 crore has been allocated to various ministries over the years. About Rs 12,400 crore was allotted to the Ministry of New & Renewable Energy, while some Rs 3,500 crore has provided to the Ministry of Water Resources, River Development and Ganga Rejuvenation.
The government introduced the clean energy cess in 2010 with a levy of Rs 50 on every tonne of coal sold. This was increased to Rs 100 per tonne in 201415, Rs 200 per tonne in 2015-16 and Rs 400 per tonne this financial year. The government collec ted Rs 12,600 crore from the cess in 2015-16 and is expected to garner Rs 26,148 crore in 2016-17.
An industry executive said with renewable energy costs declining, there may no longer be a need for subsidy , known as viability gap funding, for such projects. The government had also planned to offer in centives to power distribution companies to purchase solar and wind energy .
“However, a very small portion of the fund found its way into funding these projects. Now with tariffs for solar and wind power generation declining, the requirement of viability gap funding for these projects are losing relevance,” said the senior renewable energy industry executive.
“The government, therefore, needs to develop suitable mechanisms to encourage discoms to buy renewable power and consider a mechanism for making timely payments,” he said. Procurement-based incentives can help bridge the difference between the cost of renewable power generation and average power purchase cost, said another executive.