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(ix) To ensure reliable supply <strong>of</strong> energy to the people at reasonable and affordable<br />

price.<br />

(x) To develop a regional energy market for rational exchange <strong>of</strong> commercial energy<br />

to ensure energy security” (NEP, 2004, p. 2).<br />

Renewable Energy Policy<br />

<strong>The</strong> National Energy Policy (NEP) 1996 also covers the Renewable Energy Policy. <strong>The</strong>re are<br />

different objectives set <strong>in</strong> the policy for the development <strong>of</strong> renewable energy sectors. <strong>The</strong><br />

objectives are given below:<br />

“• Promotion <strong>of</strong> renewable energy attract<strong>in</strong>g private capital <strong>in</strong>vestment<br />

• To accelerate electrification program us<strong>in</strong>g renewable energy resources<br />

• To reduce pressure on commercial fuels<br />

• <strong>Generation</strong> <strong>of</strong> power utiliz<strong>in</strong>g renewable energy to share at least 5% <strong>of</strong> total demand by<br />

2010 and 10% by 2020.<br />

• To ensure optimum development <strong>of</strong> all renewable energy sources<br />

• To ensure environmentally sound susta<strong>in</strong>able energy development programs caus<strong>in</strong>g<br />

m<strong>in</strong>imum damage to environment.<br />

• To encourage public and private sector participation <strong>in</strong> the development renewable<br />

energy<br />

• To promote competition among the entrepreneurs” (NEP, 2004, p. 42).<br />

Under the policy, the renewable energy entrepreneur is responsible to f<strong>in</strong>d its consumer for<br />

electricity. <strong>The</strong> tariff <strong>of</strong> electricity can be settled mutually by the entrepreneur and the<br />

consumer. <strong>The</strong> entrepreneur can build its own distribution system or it can use the exist<strong>in</strong>g<br />

distribution system <strong>of</strong> different utilities subject to payment <strong>of</strong> wheel<strong>in</strong>g charges. <strong>The</strong> utilities<br />

may buy the electricity <strong>from</strong> the grid connected renewable energy projects through mutually<br />

agreed Power Purchase Agreement (PPA). <strong>The</strong> policy <strong>of</strong>fers different f<strong>in</strong>ancial <strong>in</strong>centives to<br />

promote the sector. <strong>The</strong> renewable energy entrepreneurs shall be exempted <strong>from</strong> corporate<br />

<strong>in</strong>come tax for a period <strong>of</strong> 15 years. 100% depreciation <strong>in</strong> the first year was considered for<br />

solar projects and 100% depreciation for 5 years was considered for other renewable projects<br />

such as w<strong>in</strong>d, biogas etc. Import <strong>of</strong> renewable energy plant or equipments will be free <strong>of</strong><br />

custom duties and Value Added Tax (VAT). Foreign <strong>in</strong>vestors are encouraged to enter the<br />

bus<strong>in</strong>ess with jo<strong>in</strong> venture. <strong>The</strong> policy also <strong>of</strong>fers some other <strong>in</strong>centives for the foreign<br />

<strong>in</strong>vestors (NEP, 2004, p. 43-44).<br />

11

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