Finance Minister Arun Jaitley’s Budget speech was silent on the energy space, but, as the saying goes, ‘read the fine print’.

Not only has Jaitley tweaked the excise duty on petrol and diesel but also extended the direct benefit of Road and Infrastructure Cess to oil and gas pipelines, oil and gas/LNG storage facilities and city gas distribution networks. In fact, Finance Bill, 2018 extends the status to Electricity Generation, Transmission and Distribution as well.

Jaitley has trimmed the excise duty on petrol and diesel by ₹2 a litre. He has also abolished road cess of ₹6 a litre and replaced it with a Road and Infrastructure Cess of ₹8 a litre.

The Finance Bill has extended the scope of infrastructure to hydrocarbon as well.

“This will be mean that even projects relating to oil and gas pipelines, city gas distributions, oil/gas/LNG and strategic storage of crude oil can get funds from the government from the cess of ₹8 a litre from petrol and diesel,” DK Sarraf, Chairman, Petroleum & Natural Gas Regulatory Authority, told BusinessLine .

According to the proposal, the basic excise duty on unbranded petrol will now be ₹4.48 a litre, while that on unbranded diesel will be ₹6.33 a litre. This, however, does not mean anything for the consumer, as there will be no change in the retail price.

The hydrocarbon industry has been demanding infrastructure status on the grounds that there is no difference between roads and pipelines. It says it’s the way forward to move to a gas-based economy.

The excise rejig will allow the government to park more funds in major infrastructure projects. K Ravichandran, Senior Vice-President and Group Head, Corporate Ratings, ICRA Ltd, said: “The Budget has changed the tax structure for petrol and diesel... so that adequate funds will be available for the road building programme without impacting prices for the consumer.”

Biofuel boost

The biofuel industry is ecstatic about the introduction of the new cess, since biofuel blended petrol and diesel is exempt from this levy, according to Sandeep Chaturvedi, President, Biodiesel Association of India.

“This will give a much needed boost to the biofuel sector. Oil marketing companies shy away from blending due to the higher costs. Now they will have a leeway of ₹8 per litre since the Road and Infrastructure Cess is not applicable to blended fuel. Effectively, the companies will have a margin of ₹2-3 a litre after blending the fuel,” he said.

Power positive

For the power sector, the positive came for clean energy, with the proposal to eliminate import duty on solar panel components.

The duty on solar tempered glass or solar tempered (anti-reflective coated) glass for the manufacture of solar cells, panels and modules has been reduced from 5 per cent to zero.

Jaitley said farmers are increasingly installing solar water pumps, and the government will support them.

“The government will take necessary measures and encourage State governments to put in place a mechanism that their surplus solar power is purchased by the distribution companies or licensees at reasonably remunerative rates,” he added.

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