Budget crumbs leave power players sore

By Ketan Bondre

MUMBAI (Reuters) - India's 2009/10 union budget disappointed players in the power and allied sectors who found it falling short of expectations, except for a hike in the government-run schemes, industry officials and analysts said.

"Somehow income tax, excise, customs benefits and other incentives which are critical for the investments in the power sector, are missing," Harry Dhaul, director general of Independent Power Producers Association of India (IPPAI) said.

Industry bodies like IPPAI and Council for Power Utilities (CPU) had sought an extension of a 10-year income tax holiday for power project developers beyond March 2010.

"We wanted 80I(A) benefit to be extended (to project contractors and equipment makers); that did not happen...We were looking for fiscal incentives for power projects; that did not happen," Ramesh Chandak, chief executive of KEC International, said.

Industry observers believe that the extension of tax holiday could come to project developers during next fiscal year.

"It would continue because the capacity addition requirement is still high," Manish Agarwal, executive director, KPMG said.

Industry officials are divided on the proposal to make Indian Infrastructure Finance Corp (IIFCL) refinance 60 per cent of commercial bank loans for public-private partnership projects "in critical sectors" over the next 15 to 18 months.

"There is some ambiguity about IIFCL...unless we read the fine print we will not know whether there is something in them or not," said Manish Mohnot, executive director of Kalpataru Power.