Engin Update - Energy Legislation could hit Profits
INDIAN industrial companies need to take serious energy efficiency measures if they do not wish to have their profits hit by proposed new energy conservation legislation.
The Energy Conservation (Amendment) Bill 2010 looks set to kick-starting India's Perform, Achieve and Trade (PAT) scheme, which lays down efficiency targets for energy-intensive industries.
The Confederation of Indian Industry (CII) reckons companies profits will be eroded if they are unable to achieve their set energy efficiency target they would then have to pay for the price of an energy-saving certificates, if not they would face a hefty fine.
The Mandatory PAT scheme, when ratified, will cover 714 industrial consumers in nine energy-intensive industrial sectors (thermal electric power generation, fertilizers, steel, cement, pulp and paper, aluminium, chlor-alkali, textiles and railways). As well as the major industrial energy consumers, the PAT scheme will also include large power stations as these are large users of energy in their own right.
The PAT scheme involves the issuing of energy-saving certificates to industries that consume less than the specified amount of energy, thus allowing them to sell their earned credits to the companies whose energy consumption exceeds their specified target.
The CII point out that as the PAT scheme becomes operational, the energy-intensive manufacturing companies will necessarily have to exploit process-oriented energy saving to achieve their mandated energy-conservation goals.
Enigin Distributors provide energy saving solutions from Enigin PLC that not only save money and reduce vulnerability to government legislation but also maintain production - leading to protection of and the bolstering of profits.
The companies that fail to achieve their targets will have to buy credits, failure to do so means they are liable to pay an increased penalty by way of a fine. Under the amended Act, fines have been increased from Rs 10,000 to Rs 1 million and from Rs 1,000 to Rs 10,000 for each day the offence persists.
