BIOMASS BASED POWER PRODUCERS SEEK INTEREST SUBVENTION

Biomass-basedpower producers have knocked on the doors of the Ministry of New and Renewable Energy for lobbying with the Ministry of Finance for a 2 per cent interest subvention for the loans taken by them. The Indian Biomass Power Association had approached the Ministry of Finance with this (among others) request. However, last month the Ministry wrote back to the Association noting that it had considered the Associations requests in consultation with the Reserve Bank of India. “The need and justification for providing interest subvention for biomass power plants may be taken up with the nodal ministry, i.e., the Ministry of Non Conventional Energy Resources, said the Finance Ministrys letter to the Association.India today has 2,665 MW of biomass power capacity but several plants are not in generation due to a number of reasons such as unremunerative prices for the electricity they produce and rising costs of fuel. Often, the fuel is not available at all. In addition, the biomass power producers have to contend with a plethora of charges and levies even though biomass power is considered to be green power. For instance, in Tamil Nadu, the scheduling and system operation charges were hiked recently from Rs 27 to Rs 2,000 per MW, and from Rs 500 a day to Rs 2,000 a day, respectively. In addition, there is a 5 percent electricity duty.In view of this, the biomass producers have been asking for lower interest rates. The Association even wanted the government to fix interest rates on loans to biomass plants at 10 per cent, but this was rejected outright by the government on the grounds that interest rate fixing was up to the individual banks. The Ministry of Finance also said that the banks go by a base rate below which they shall not lend.

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