ENERGY EFFICIENCY
BEE Recommends Tax Sops for Energy-Efficient Appliance Producers
The Bureau of Energy Efficiency (BEE) an agency of the power ministry, has submitted its recommendations to the government, favouring low or nil taxes on producers of 5-star rated or high energy-efficient equipment and appliances, and higher taxes on no-star rated or low-star rated equipment,” informed Sandeep Garg, energy economist at BEE, during a seminar on energy and climate change.
Garg said the strategy behind proposing a differential tax system was to encourage appliance producers to come up with highly energy-efficient products that not only save energy but also significantly reduce greenhouse gas emission.
According to Garg, India was able to save 2,104.1MW of energy in the last fiscal against a target of 1,400MW. It has also resulted in CO2 emission reduction of 5.2 million tonnes in 2008-09 as against 2.95 million tonnes in 2007-08. Pointing to significant electricity transmission and distribution losses in the country, Garg said that several state governments including Karnataka, Uttarakhand, Chhattisgarh, Gujarat, Rajasthan and Uttar Pradesh have initiated steps to purchase only 3-star rated power transformers.
“The ministry of power is contemplating a plan to make it mandatory for all the states to purchase and use only energy-efficient equipment from January 2010, to ensure substantial reduction in transmission and distribution losses,” he said. BEE formulates standards and star labels for consumer products such as air-conditioners and refrigerators, and is targeting a saving of some 10,000MW of power consumption by 2012.

Free Distribution of CFL Bulbs
The Andhra Pradesh Eastern Power Distribution Company Ltd (APEPDCL) is distributing CFLs among consumers of domestic category to replace their incandescent bulbs, in a measure that will ensure better use of power and to protect the environment. The consumer has to pay Rs 15 through the power bill for the first CFL bulb received, and no additional amount has to be paid to APEPDCL.
In Kerala, electricity minister A K Balan has informed the State Assembly that the government would provide CFLs to all families including those in APL (average poverty line) in the state by the end of the year. As a pilot project, the government had distributed 10 lakh CFLs at a subsidised price of Rs 15 as against its original cost of Rs 115 per bulb, and the total expenditure on this account was Rs 6 crore.
The minister said that by providing 10 lakh CFLs, the State Electricity Board (SEB) could save 40MW of energy, and added that if the board wanted to set up a project with a generating capacity of 40MW it would require an estimated Rs 240 crore. He also claimed that once the government succeeded in giving CFLs to all families in the state, it could save about 350MW energy.
In Himachal Pradesh, with the lifting of the model code of conduct after completion of elections, the SEB has resumed distribution of CFLs which are being supplied to domestic consumers free of cost. The consumers would be required to bring the latest electricity bill along with payment receipt for obtaining four incandescent lamps as replacement.
The HP government is providing a pack of four CFLs two each of 15W and 20W free of cost to almost 16 lakh domestic consumers by spending Rs 80 crore under the Atal Bijli Bachat Yojna. Announcing the decision, chief minister Dr Prem Kumar Dhumal said that the scheme would help in reduction of electricity bills of consumers by more than 50% and enable the government to provide quality power supply.

How Companies Earn on Free Bulb Distribution
Project Bachat Lamp Yojana is being overseen by the Bureau of Energy Efficiency (BEE) of the power ministry. under which lamp makers will sell as many as 40 crore CFL bulbs across the country at Rs 15 a piece to replace incandescent bulbs. In the process, the country will earn carbon credits, which will be passed on to the lamp manufacturers. This, in turn, can be traded globally. Pilot projects have started in Andhra Pradesh and Haryana.
Lighting firms selling energy efficient lamps at 27% of the cost will still make money by selling valuable carbon credits in global markets. Carbon credits are awarded under an international pact to projects in developing countries that reduce greenhouse emissions, and the credits can then be sold like shares and bonds. So, were lamp manufactures to sell CLS at a subsidised rate of Rs 15 (which cost around Rs 55 and retail for Rs 80 ) for three years, they would still stand to gain nearly Rs 22 billion!
If the project manages to replace even 30 crore out of the targeted 40 crore, the net sales will amount to Rs 4.5 billion at Rs 15 for each bulb. But each bulb will also generate 0.05 certified emission reductions per year. Thus, 30 crore bulbs will generate up to 1.5 crore CERs in a year and 4.5 crore in three years. With one CER trading at Rs 754 as of April 29 on Mumbai’s Multi Commodity Exchange (MCX), 4.5 crore CERs would fetch Rs 33.93 billion in three years.
Accordingly, lamp manufacturers get a net return of Rs 38.43 billion, and make a profit of Rs 21.93 billion on 30 crore bulbs, even though they may have sold the lamps at a conventional loss of Rs 40 each.
This opportunity is being eyed by 11 companies including Osram, Philips, Surya and Wipro. Osram, which is implementing the pilot projects, is eyeing some 6,30,000 households in Visakhapatnam and 4,65,000 in Sonepat. The above information is courtesy an article by James Jose of IANS, New Delhi, published in Thaindian News.

BANKING
SBI Offers Incentives for Green Homes
State Bank of India has introduced a new home loan product - Green Homes - in a bid to promote environment-friendly rated residential projects by offering concessions on home loans such as reduced margin, softer interest rate and zero processing fee. The margin will be lower at 15% of the loan amount instead of the current 20%; interest rate on the loan will be 25 basis points lower than the card rate; and no processing fee will be charged.
Green Homes will apply to residential projects rated by Indian Green Building Council (IGBC), which stipulates that a green building is one that uses less energy, water and natural resources, creates less waste and has healthier ambient air as compared to a standard building. IGBC is a part of the Confederation of Indian Industry-Sohrabji Godrej Green Business Centre. SBI is currently supporting green residential projects by Tata Housing and Mahindras.
Owners of green homes can hope to reap tangible benefits in the form of 20-30% energy savings, as the apartments are designed in such a manner that they get ample natural light throughout the day. The construction material used ensures adequate thermal storage mass for retaining heat energy and thus keeping interiors cool. Plus, water savings of 30-50% can be made with rainwater harvesting and recycling.

PSBs Adopt Prudential Measures
Public sector banks have reduced exposure to new commercial realty projects to 10% of capital funds in view of the asset stress in the sector. Exposure limits till last year ranged between 15% and 20% of their net-owned funds. Most accretions to the PSBs’ delinquent asset portfolios in the last financial year were from the commercial realty sector, according to bank officials.
Although the Reserve Bank of India does not indicate sector-specific exposure ceiling on commercial real estate, the guidelines provide flexibility to individual banks to fix limits. PSBs, the officials said, have taken advantage of this guideline as a prudential measure, even though they are still being flooded with loan requests for commercial realty projects.
According to bank officials, in many portfolios asset stress was already evident, with falling loan-to-value (LTV) ratios. In many cases, the LTV ratio has dropped below the prudential level of 1.5 times. Under current guidelines, banks are expected to maintain physical asset coverage of at least 1.5 times (150%) the loan value. Normally, as loans are amortised, the LTV ratio tends to rise. A falling LTV, however, implies depreciation in the value of the asset.
Bank officials said that some project promoters had also begun approaching banks for corporate debt restructuring (CDR) a mechanism that allows promoters a reprieve from being classified as non-performing assets. The terms of the loans are restructured and payments rescheduled. The mounting recourse to CDR has also signalled PSBs to stem credit flow to new commercial realty projects.

INFRASTRUCTURE
Infrastructure Fee on New Buildings Nets Tamil Nadu Rs 102crore
The infrastructure and amenities charge on real estate development has netted the Tamil Nadu government over Rs 101.71 crore as of March 2009. Since the introduction of the charge, in the 18-month period between June 2007 and March 2009 developers have paid over Rs 101.71 crore. The infrastructure and amenities charge is levied at the rate of Rs 200 to Rs 1,000 per sqm for various types of buildings.
The state government has announced plans for a regulated development of Chennai suburbs. Moving the demand for grants to housing and urban development, Suba Thangavelan, minister for Housing & Slum Clearance, has said that with large portions of Chennai suburbs coming under the Thiruvallur district, the Tamil Nadu government would set up a local committee to chart out plans for planned development of the suburbs. He announced that additional built-up areas would be allowed in housing projects with residential units of a maximum of 30sqm for the economically weaker section, and 50sqm in the affordable housing category. Developments targeting the economically weaker section would be allowed 50% higher Floor Space Index (FSI) and the affordable housing segment 30% higher FSI.

TAXATION
GST to be Implemented at National & State Levels
While presenting the Union Budget 2009-10, Finance minister Pranab Mukherjee has announced that the Goods and Services Tax (GST), both at the national and state level, will be introduced by April 1, 2010. He has said that further convergence of central excise duty rates to a mean rate is needed to facilitate the process. The current mean rate is 8%. Since many items attract less than the mean rate, he has said that there is a need for enhancing this rate. However, food items and drugs, pharmaceuticals and medical equipment are going to be exceptions. Other items that will retain the 4% rate will be paper, paper board, items of mass consumption such as pressure cookers, cheaper electric bulbs, low-priced footwear, water filters and purifiers, CFLs, power driven water pumps, and paraxylene.
The government has been contemplating a new road map for GST, which is aimed at unifying the fragmented Indian market by getting rid of multiple state-specific levies and differences in tax rates. The proposed GST will integrate most indirect taxes on goods and services at the state and central levels. Indirect taxes are those where incidence of tax is usually not on the person who pays the tax. These are largely taxes on expenditure, and include value-added tax (VAT), excise and service tax. GST will bring all these taxes under one head and will be levied at the point of sale instead of point of origin.