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Home News Power Sector News Review of mega power policy blocked by Election commission

Review of mega power policy blocked by Election commission

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Mega Power policyThe Central government’s effort to help large corporates by modifying mega power policy has been blocked by the Election Commission. The revised so-called mega power policy has been in the making for at least a year, but the power ministry’s request to the commission to be allowed to put up this policy before the cabinet has been denied because of the general election.

A key feature of the revised policy was the extension of the so-called mega power project status to captive plants that generate at least 1,000MW. This would have benefited private sector companies such as Mukesh Ambani’s Reliance Industries Ltd, or RIL, Jindal Steel and Power Ltd and Anil Agarwal-owned Vedanta Resources Plc’s Sterlite Industries (India) Ltd, which are setting up captive power projects.

Power ministry officials declined comment on whether this provision continued to be part of the policy they had wanted to put up before the cabinet. The Election Commission frowns on policies that it thinks could have a bearing on the outcome of the elections. These could wait till a new government takes over.

“We had written to the EC asking for their permission to allow us to take the policy for the government’s consideration. The EC has asked us to consider it once the elections are over,” said a senior power ministry official who did not want to be named due to the sensitive nature of the issue.

Captive power plants, set up by a company to generate electricity exclusively for its own use, are currently not eligible for the mega project status, which would entitle them to fiscal incentives, including a waiver of customs duty on equipment imports and a 10-year tax holiday.
While Election Commission officials did not respond to phone calls, repeated phone calls and a message left for outgoing power secretary V.S. Sampath remained unanswered. He will join the Election Commission shortly, when chief election commissioner N. Gopalswamy retires.

The policy also does away with several restrictions related to plants seeking a mega power project status said a senior government official who did not want to be identified.

Power plan: An Essar power plant at Hazira. The revised policy seeks to extend mega power project status to high-capacity captive plants.
Power plan: An Essar power plant at Hazira. The revised policy seeks to extend mega power project status to high-capacity captive plants.
According to existing norms, a thermal project will be given mega power project status if it has a generation capacity of at least 1,000MW, sells power to at least one state and is located in a state that has begun privatizing power distribution in cities with a population of at least one million. These restrictions have been done away with in the revised policy, this official added.

In the case of hydropower projects, the threshold capacity is 500MW. In Jammu and Kashmir and the North-East, the threshold power generation capacities to be eligible for mega power project status are 700MW for thermal projects and 350MW for hydropower projects.

RIL plans to set up two power projects of 2,000MW each at its special economic zones, or SEZs, one each in Haryana and Maharashtra. It also wants to develop captive power capacity of around 4,000MW to supply electricity to the thousands of outlets its unit Reliance Retail Ltd plans to open, as reported by Mint on 9 August 2007. JSPL plans to set up captive projects of 2,609 MW in Jharkhand and 2,600 MW in Orissa. Sterlite, through its unit Bharat Aluminium Co. Ltd, or Balco, is setting up a 1,215MW captive power plant in Orissa, and a 1,200MW project in Chhattisgarh.

Government says that the revised policy could encourage more companies to develop captive power plants and improve India’s track record in terms of adding generating capacity. In the five years to 2007, the country saw the addition of only 20,950MW of generating capacity against a target of 41,110MW.

India has an installed power generation capacity of 147,000MW and plans to add 78,577MW by 2012. In addition, the country has a captive capacity of 45,000MW with an additional 10,000MW expected to be commissioned by 2012.


Source - Mint
 

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