Cabinet eases terms for mega power plants | business | Hindustan Times
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Cabinet eases terms for mega power plants

business Updated: Jan 03, 2014 00:06 IST
HT Correspondent
HT Correspondent
Hindustan Times

The UPA government on Thursday moved to ease conditions that could make it easier for large power projects under an ambitious programme to create electricity generation capacity in the nation, which have been mired in problems related to fuel linkages or state-level approvals.

The Cabinet Committee on Economic Affairs (CCEA) relaxed norms for 25 Ultra Mega Power Projects (UMPP) by increasing the time period for them to submit mega project certificates to tax officials. The certificates must show how far they have come in procuring coal and buying or importing the necessary equipment.

UMPPs involve capacities of 4,000 megawatts (MW) or more.

Analysts said the CCEA’s decision provided clarity to ensure financial closure for the projects executed by private companies but under close supervision of the government that has provided them easy import conditions and a regime to secure fuel linkages.

The government has now offered the 25 UMPPs a maximum time period of 60 months to furnish the “mega” certificates to tax authorities against the current 36 months from the date of import for mega projects that have not signed power purchase agreements with distribution companies. At this stage, the UMPPs are dubbed “provisional”.

Kameswara Rao, energy utilities and mining leader, PricewaterhouseCoopers, analysts firm said, “It is a positive move, UMPPs are more relevant today than ever for India.”

The amendments in the Mega Power Policy 2009 for provisional mega power projects stipulates the developer must tie up at least 65% of installed capacity or the net capacity through competitive bidding against the earlier policy under which no such bidding was required.

CCEA approval requires the developers to seal up to only 35% of installed capacity under regulated tariffs for those projects that have crossed the provisional stage and have signed long-term PPAs with approval from state regulators under the relevant policies.

This one-time exemption is limited to 15 projects, which are located in the states having mandatory PPAs under regulated tariffs.

Meanwhile, the coal ministry has identified some coal blocks, which are under process for allocation and applications, which will be invited shortly. The development follows Bihar writing to coal ministry in October 2013 requesting for allocation of captive coal blocks for the proposed Ultra Mega Power Project in Bihar.