The Maharashtra government will invite tenders this month to supply 10,000 solar-powered agricultural pumps to farmers on a pilot basis, an official in the state energy ministry said.
Chief minister Devendra Fadnavis intends to replace half a million of the state’s 2.9 million electric pumps with solar pumps in five years.
“We are expecting to issue the tender sometime in June, shortlist vendors by August-September and start installation of pumps by December,” the energy ministry official said, requesting not to be identified.
“To ensure that the programme also promotes Make In India, we have decided that only solar pump manufactures who are approved by the ministry of new and renewable energy will be allowed,” said the official quoted above.
He said there are about 35 such solar pump makers, mostly Indian, or foreign firms with Indian factories. Traders will not be allowed to participate as it would indirectly benefit foreign manufacturers such as those from China and Taiwan.
According to Kameswara Rao, leader and executive director of energy, mining and utility practice at audit and consultancy firm PwC, the decision to source pumps from empanelled domestic suppliers may be justified as it entails direct government subsidy.
He, however, added that such steps alone will not be enough to encourage the domestic industry.
“The government must create proper conditions for vertically integrated manufacturers of solar cells through capital support, tax exemptions and demand creation as Germany and China have done in the past. This will help reduce cost of domestic panels that suffer a 25-30% cost disadvantage over imports,” said Rao.
Maharashtra has one of the highest industrial tariffs in the country around `8.50 per unit, which is at least `1.50 per unit higher than rates in neighbouring states such as Gujarat, Karnataka, Telangana and Andhra Pradesh.
The state government is now taking various steps to reduce industrial tariff, including reducing its own return on investment, to attract investments to the state.
The decisions to replace electric power pumps with solar power pumps is part of that endeavour as it will reduce the cross-subsidy burden of nearly `8,000 crore.
Users from the agriculture sector, those below the poverty line and even smaller residential consumers are charged lower tariffs and this is compensated by higher tariffs imposed on industrial and commercial sector users, which is called cross-subsidisation.
“If electric pumps are replaced with solar-powered pumps, they will reduce this subsidy burden both on industry as well as state government. This move is also expected to help Mahavitaran. Since these (electrical) pumps are located in remote locations, they add to its distribution losses, and if replaced by solar pumps, they will reduce Mahavitaran’s distribution losses, too,” said the official quoted above.
The Maharashtra State Electricity Distribution Co. Ltd is commonly referred to as Mahavitaran.
Source: Mint; 01 June 2015