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Home News Power Sector News Central Govt plans to make changes in mega power policy

Central Govt plans to make changes in mega power policy

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ShindeThe central government is prepared to make it easier for generation projects to qualify for incentives under the mega power policy by dropping the clause on mandatory privatisation of distribution networks for states that plan to buy electricity from plants of up to 1,000 mw. Policy modifications drafted by the power ministry for seeking Cabinet approval also proposes to scrap the condition requiring a mega power project to sell electricity to states other than where they are located. Several other changes listed among the proposal are aimed at giving a fillip to the sector and in line with PM Manmohan Singh's thrust on ramping up generation.

The clause on inter-state power sale is being done away in view of the rise in demand in states, which now makes it possible for industrialised ones such as Maharashtra and Gujarat to consume all of the 1,000 mw that a mega power project can generate.

Giving a thrust to enhancing generation capacity, the changes also propose to give `mega' status to captive and merchant power plants if they fulfill other conditions in the policy, including their size -- 1,000 mw for fossil fuel-fired plants and 500 mw for hydel units. A mega status will entail fiscal benefits such as tax holidays and duty breaks on import of equipment. Captive units are allowed to sell surplus power to the grid.

In view of the tariff policy stipulation that all future procurement of power has necessarily to be done through tariff-based competitive bidding, it is now suggested that the all developers of mega power projects will have to undertake either tariff-based bidding for the entire power to be produced or opt for international competitive bidding for procurement of equipment for a project.

The changes also suggest that money spent on upgrade and modernisation of existing plants will not get benefits of the mega policy if the spending does not add incremental capacity to match the figure laid out in the policy. Proposals for expansions of existing plants will also not get the policy benefits if these do not add up to the qualifying capacity.

Source- Times of India

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