CHENNAI: The government’s announcement to lower corporate tax rate is a positive development for the power sector, as it would allow power generators with cost plus power purchase agreements (PPAs) to pass on the lower tax benefit to the power distribution utilities (discoms), according to ICRA.
As per ICRA’s estimates, the extent of benefit that would accrue to discoms from the power generation and transmission segments (mainly from central and state utilities), would be about Rs 25 billion annually.
Sabyasachi Majumdar, senior vice-president & group head – corporate ratings, ICRA, said, “The benefit so accrued to discoms in turn would enable them to lower their cost of supply and hence, reduce the gap between average tariff and cost of power supply by about 3 paise per unit sold at all India level.”
