MC Exclusive | RK Singh seeks more funds for power sector, sops for green hydrogen

Power Minister RK Singh speaks at MC Policy Next Summit

The ministries of power and new and renewable energy have urged the finance ministry for allocation of more funds for the sector and additional incentives for the National Green Hydrogen Mission (NGHM) in the Interim Budget.

Answering questions at Moneycontrol's Policy Next summit on January 18, Union Minister for Power and New and Renewable Energy RK Singh said that even though his departments have put up multiple asks for the interim budget, the final call will be taken by the finance ministry.

"I want more finance and more incentives for green hydrogen from the interim budget. But that’s between Union Finance Minister Nirmala Sitharaman and me," Singh said while discussing the ministry's expectations from the Interim Budget.

Also read: Govt launches fresh incentive scheme for green hydrogen, green ammonia production based on demand aggregation.

Talking to Moneycontrol during a press conference on January 15, Singh said the Ministry of Power needs more funds for the Revamped Distribution Sector Scheme (RDSS) which aims to reduce the Aggregate Technical & Commercial (AT&C) losses to pan-India levels of 12 percent and Average Cost of Supply (ACS)-Average Revenue Realised (ARR) gap to zero by 2024-25.

The interim Union Budget will be presented on February 1. It will be a vote-on-account in view of the general elections slated for April-May 2024. A vote-on-account enables a government that is completing its term to fund its expenses for the short period until a full budget is passed.

Sitharaman has already stated that “no spectacular announcements” should be expected from the upcoming budget as the full budget for FY25 will be presented after the formation of a new government.

Yet, the power and green energy industry is hopeful that the government will ensure policy consistency, focus on green hydrogen, lower goods and services tax (GST) rates, and easy access to subsidies and climate finance.

Also read: Budget 2024 | Power sector wants policy consistency, lower GST rates, easy access to subsidies.

Senior officials in the ministry of new and renewable energy (MNRE) said one of the asks for the interim budget also includes a provision for a viability gap funding (VGF) scheme for offshore wind with an outlay of at least Rs 6,000 crore.

On June 13, 2023, Moneycontrol first reported that the government is likely to announce a VGF of around Rs 6,800 crore to promote offshore wind projects in India. The VGF will be provided to projects with a total capacity of 1 gigawatt (GW).