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Monday , January 17 , 2011
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Green fears over solar subsidy bungle
A villager switches on a light powered by solar energy in Morabandar near Mumbai

Calcutta, Jan. 16: A Rs 2,000-crore solar energy subsidy bungle by the Union ministry of new and renewable energy, revealed by The Telegraph this morning, can prove damaging for the national climate action plan announced by the Prime Minister, experts said today.

“The solar (energy) mission is the first mission within the national climate action plan and also the pivot of India’s efforts at reducing greenhouse gas emissions. The high level of irregularities at such an early stage will definitely pull back our efforts,” a senior Union environment ministry official said from Delhi.

Environmentalist Subhas Dutta, who had moved Calcutta High Court sometime ago seeking government action to popularise solar power, said: “According to the Prime Minister’s announcement, the country is scheduled to generate 22,000MW solar energy by 2020. If a controversy of such magnitude surfaces while producing less than 80MW, what will happen in the future?”

Last August, the Farooq Abdullah-headed ministry of new and renewable energy (MNRE) had struck agreements with about 70 private companies under which they would produce 77.8MW of solar energy in all. The subsidy, to be paid for 25 years, was fixed at Rs 12.41 per unit.

Yet, just two months later, the Union power ministry selected 30 companies to produce solar energy against subsidies ranging between Rs 5.45 and Rs 7.26 per unit, raising questions over the MNRE’s subsidy rate that is 70 to 130 per cent higher.

The subsidy rate depends on the estimated production cost. B. Bhargava, a senior MNRE official, has admitted that one reason for his ministry’s higher estimate of the production cost (and therefore, the subsidy) could be that, unlike the power ministry, it did not invite a bidding process.

The MNRE had unilaterally fixed a blanket rate for production costs across the country — irrespective of the difference in average sunshine the various regions receive —based just on a Central Electricity Regulatory Commission guideline.

Documents this newspaper possesses show that the MNRE has asked for Rs 1.29 lakh crore to pay the “generation-based incentive” (subsidy) over the next 25 years.

Among the 70 companies chosen by the MNRE, hardly a handful are from the east and Northeast though a large part of the subsidy will be funded by a coal cess generated largely from these regions.

“It was definitely not a level playing ground. Some companies or consortiums placed eight applications and got all of them cleared, while many states did not see a single project cleared,” said a Bengal-based entrepreneur.

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