Equity Funding and Strategic Update
Industry and Regulatory Update
Industry Update
Tariffs continue to rise Reflects higher threshold return expectations
of disciplined international financial sponsors. Fewer companies that
have the financial and operational capability to undertake increasingly
large projects.
Solar Project Tariffs are Rising (1)
Tariff (INR/kWh)
2.80
2.60
*2.40
2.20
2.00
2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19
Basic Custom Duty (BCD) Implementation
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A new import duty was
announced and we expect this will become effective next year. All of our
under construction and committed projects have change of law
provisions and there should be no material impact on returns as a result.
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Regulatory Update
Positive rulings on Safe Guard Duty (SGD) recovery
The company
has received positive rulings on recovery of SGD for the Rajasthan 5 &
6 projects and an increase in tariff for Maharashtra 3 of SGD recovery
has been put in place.
―
Andhra Pradesh (AP) Several courts and regulatory orders have
compelled AP to begin making payments on past due bills. The state
DISCOM is paying past due invoices to Azure. The court has ruled
against recent curtailment by the state DISCOM and we have filed a suit
for recovery and to enforce this judgment.
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New tax regime positive for the economy and solar For companies
formed up to Sept 30, 2019, they can elect to pay a 22% marginal tax
rate, down from 25
30%, and no Minimum Alternate Tax (MAT)
although all tax credits related to past tax holidays and incentives will be
eliminated. For those companies that have tax credits and tax holidays,
such as Azure, and want to keep the credits, MAT will be reduced from
18% to 15%. For electric generating companies created after Sept 30,
2019, an income tax rate of 15% and no MAT will be applied.
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1) Tariffs are the lowest solar bids for ground mount SECI auctions in India; Mercom
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