Electricity Bill Reduction: Electricity will become cheaper due to GST Rate Cut, you will have to pay this much for 1 unit!

Electricity Bill Reduction: Due to the reduction in GST rates, there can be a reduction in electricity prices. According to experts, after the GST rate cut, electricity per unit can become cheaper by about 10 to 14 paise. Because due to this reduction, it will be a little cheaper for the power companies to generate electricity.

Electricity Bill Reduction: The changes made in GST rates two days ago have raised hopes of positive changes in the power sector. Experts believe that the amendment in GST rates on renewable energy equipment and coal-based power generation will reduce electricity rates. These changes will not only provide cheap electricity to consumers but will also provide financial relief to discoms and developers. It has also been said that the rates of electricity generated in thermal power plants will come down by up to 10 paise per unit in the country.

How much will electricity become cheaper due to GST Rate Cut?

Pranav Master, Senior Practice Leader and Director, Crisil Intelligence, says, “By reducing the GST rate on renewable energy equipment from 12 to 5 percent, the effective rate of EPC services (cost of engineering, construction and procurement in the plant) will come down from 13.8 percent to about 8.9 percent. This will reduce the electricity rates of renewable energy projects by 4-5 percent, which is equivalent to a saving of about Rs 0.11-0.14 per unit. ”

He further said that this reduction will increase the demand of discoms and encourage corporate consumers to adopt the open access route. Consumers will get the benefit of cheap renewable electricity, while the investment capacity of developers will increase. On the other hand, manufacturers may face some challenges in the working capital cycle due to low GST input credit.’

The cost of new projects will come down

Crisil Ratings Director Ankit Hakhu estimates that the reduction in GST rate will reduce the total cost of new projects by 4-7 percent and the return on equity for developers will improve by 100-200 basis points. The reduction in GST rates is also likely to have a positive impact on coal-based thermal power, which has a 73 percent share in the country’s total power generation.

He further said that although the GST rate on coal has been increased from five to 18 percent, but at the same time the cess of Rs 400 per tonne has been removed. This is expected to reduce the cost of coal-based power by more than Rs 0.10 per unit. The level of reduction will be based on the quality of domestic coal. This will reduce the financial pressure on electricity distribution companies (discoms). However, there is also a risk of increase in input costs.

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