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Solar industry wants government to scrap ‘only-on-paper’ subsidies

According to reports, it may sound strange that an industry is asking for scrapping the subsidies the government provides, but the solar industry indeed has such a plea.

Experts from the industry reiterated this demand on Saturday at Renergy 2014, a conference-cum-exhibition of the renewable energy industry, organised here by the Tamil Nadu Energy Development Agency.

The Ministry of New and Renewable Energy (MNRE) gives a 30 per cent subsidy to rooftop solar installations, which, rather than facilitating more installations, has turned out to be a hindrance.

The problem is, the subsidies exist only on paper. Since the MNRE does not have enough money to pay out the promised subsidy, arrears are mounting. Tarun Kapur, Joint Secretary, MNRE in-charge of ‘solar’, told Business Line that subsidy arrears have mounted to about Rs. 300 crore.

Typically, the individual or the company that puts up the rooftop plant, does not have to bother about the subsidy, because the company is charged net of subsidy by the ‘channel partner’, or the entity that constructs the plant for the customer. It is up to the channel partner to collect the subsidy from MNRE. Mounting subsidy arrears have restricted the ability of the channel partners to take more orders.

“We would request the government to scrap the subsidy,” said Pasupathy Gopalan, who heads American company, SunEdison’s operations in the Asia-Pacific, West Asia and Africa. SunEdison completed 1,000 small-size solar plant installations in the country this week, most of them rooftops, adding to about 11 MW.

Sunil Jain, who looks after the renewable energy business of the Hero group, also wants subsidies to be removed.

The MNRE has not been able to honour its subsidy bills because it has not been getting enough money from the Ministry of Finance. A question was raised at the discussions over the role of the ‘National Clean Energy Fund’, a fund created out of a cess collected on coal, mined or imported.

Sanjay Chakrabarti, partner, Ernst & Young, India, asked “what is happening” to the Rs. 40,000 crore collected for the fund. Sunil Jain observed that less than 1 per cent of it had been given to the MNRE, although the objective of the fund was to support infrastructure for clean energy.

Kapur had said that the MNRE had asked for Rs. 6,000 crore from the fund.

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