Source: Bridge to India
New project sanctions under the MNRE subsidy scheme unlikely this year
In the past few months, the Ministry for New and Renewable Energy (MNRE) has not sanctioned any new subsidy applications for rooftop based systems under the Central Financial Assistance (CFA) scheme. There have also been delays in the disbursement of the state level subsidies that had been sanctioned earlier. With many channel partners continuing to offer new subsidy based systems to the customers, there has been a lot of confusion with regards to the actual status of these subsidies. BRIDGE TO INDIA has decided to meet senior officials at the MNRE to get a clear indication on the subject.
The problems for the scheme began when the MNRE sanctioned only 20% of the expected funds for the current financial year (2013-14). The MNRE stopped giving sanctions for new allocations to avoid creating a backlog of disbursements. However, it decided to ask the Ministry of Finance (MoF) and the National Clean Energy Fund (NCEF) for additional funds in order to continue the scheme as planned. Therefore, the scheme was officially continued with the hope that the new funds would be allocated soon and the business could resume as usual. Therefore, the official stance from the MNRE has been that the scheme is still in place and everything, including incorporation of channel partner, suppliers, etc. is being done as per the normal procedures. Even applications for the subsidy are being accepted. The only change is that the sanction for these applications is on hold.
Within this, the MNRE has announced that a new policy for the phase two of the NSM is expected by September 2013 and until then there is no possibility of any new sanctions being provided. The disbursements for the already sanctioned projects will continue as per the guidelines for the previous phase. However, the understanding of the ministry officials is that new sanctions will not be provided until at least some more funds are released from either the MoF of the NCEF. Given the current economic conditions in the country, it is unlikely that the MoF will allocate more funds under the current financial year. A senior official responsible for the subsidy scheme at the MNRE said that the ministry is hopeful about receiving new funds soon but the funds from the NCEF can realistically be expected only by January 2014.
As these funds will also be limited, there are two key criteria for any new sanctions. First, it will be given on a first come first serve basis. The MNRE has already received applications for more than 8 MW with more new applications coming in regularly. Any new project that submits an application hereafter will automatically be placed in queue after the existing applications. Second, no individual or company will be provided a subsidy for more than 100 kWp capacity. The applicants who are currently submitting their respective documentation are being informed beforehand that if single or multiple applications are submitted in such a way that it exceeds 100 kWp, then none of those applications will be considered for approval.
Given the current status, BRIDGE TO INDIA does not expect any new sanctions to be provided until the end of the year (December 2013) and perhaps not even until the end of the financial year (March 2014). This is a bad news for all the channel partners who have been waiting to get their projects sanctioned and if they haven’t already, they will perhaps need to re-visit their short term strategy with regards to such projects. The official stance of the MNRE is that the subsidy process is still under way. However, those channel partners who have not been doing it until now, should start informing their potential clients about the possible delays in the process. In the current macro-economic conditions and general elections planned for the first half of 2014, it would be difficult to say how long this delay could be. It is unlikely that even a 1 kWp system will be sanctioned subsidy in 2013.