What the Budget does

• Fourth UMPP at Tilaiya to be awarded shortly; Chhattisgarh, Karnataka, Maharashtra, Orissa and Tamilnadu urged to bring five more UMPPs to the bidding stage by extending the required support.
• Rajiv Gandhi Grameen Vidyutikaran Yojana to be continued during the Eleventh Plan period with a capital subsidy of Rs 280 bn; allocation of Rs 55 bn for FY09.
• Rs 8 bn to be provided for Accelerated Power Development and Reforms Project (APDRP) in FY09.
• Proposal to set up a national fund for transmission and distribution (T&D) reform in the power sector.
• Coal distribution policy and appointment of a coal regulator to bring regularity to the process of coal production and pricing
• Exemption from 4% additional duty of customs has been withdrawn on power generation projects (other than mega power projects)], transmission, sub transmission and distribution projects, and specified goods for high voltage transmission projects.
• Parent company allowed to set-off the dividend received from its subsidiary company against dividend distributed by the parent company; provided that the dividend received has suffered DDT and the parent company is not a subsidiary of another company.

Also read: How Budget affects your stocks

Impact on sector

• Aggressiveness in allotting UMPPs to prospective bidders expected to be helpful in speeding up the generation capacity expansion programme.
• Setting up of a national fund for T&D reforms to provide a more focused approach towards these segments.
• Higher allocation to APRDRP to speed up reduction in losses of state electricity boards.
• Coal distribution policy and appointment of a coal regulator to bring regularity to the process of coal production and pricing.
• Removal of exemption from additional customs duty on power generation, transmission and distribution projects to increase cost for companies implementing such projects

Impact on companies

• Generation companies like Tata Power [Get Quote], NTPC to benefit from allocation of UMPPs at a faster rate
• National fund for T&D reforms to help the prospects of companies looking at open access, like Tata Power and Reliance Energy [Get Quote].
• Reforms in the coal sector to help generation companies like NTPC, Tata Power and Reliance Power.
• Removal of custom duty exemption on power projects to impact companies like NTPC and Tata Power who are planning to take aid of foreign engineering companies in setting up such projects.

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