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Biomass sector pleads for priority sector lending, waiver in MAT

According to reports, biomass power generators with a total generation capacity of 1,250 MW across the country has appealed to the Centre to treat them as an extension of agricultural activity and provide priority sector lending. Further, at least 2% interest subvention be provided to the sector, which has invested till date Rs 7,000 crore for current generation capacity, considering the investment done in difficult backward rural areas with high risk perception.

Indian Biomass Power Association (IBPA), a representative body of these generators, in its pre-budget memorandum submitted to the finance ministry has sought waiver in Minimum Alternate Tax (MAT) for the period of next 10 years or date of commissioning, whichever is later.

The association argued that most of the investment in this sector has been by first time entrepreneurs and some overseas investors with focus on clean energy when the MAT was at 11.39% which now stands at 19.99%.

Further, the association has called for the withdrawal of excise and custom duty on plant and machinery and fuel handling and processing equipments. Currently, major plant and machinery are having exemption from excise and custom duty subject to suppliers’ not availing CENVAT benefits or adjusted accordingly. The process is cumbersome and difficult.

On CSR obligation, the association president B Krishnakumar said that cost of green power from biomass sources by the obligated corporate are adjusted in their CSR (corporate social responsibility) expenditure.
Moreover, Krishnakumar  pleaded that a provision be made for funding support from National Clean Energy Fund (NCEF) for development of biomass sector through facilities such as concessional financing, loan guaratnee, generation based incentive, REC funding for state utilities and energy plantation.

Meanwhile, in a separate memorandum submitted to the ministry of new and renewable energy, the association has pressed need for a pragmatic restructuring of existing loans of the biomass sector for its survival and revival. Krishnakumar said majority of the biomass power plants are operating in huge losses, with some of them becoming NPAs. The financial problems faced by the Biomass sector was due to the difficulties of policies and regulations.

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