New Delhi: The Government on Thursday decided to further ease the Mega Power Policy in a move that will help nearly 25 projects with investments of more than Rs 1.6 lakh crore. This is expected to increase power availability in the country and also ensure that consumers are charged reasonably for electricity supply.
Benefits
To benefit from this policy, the developer will have to tie up sales with distribution utilities through long-term power purchase agreements (PPAs). The amendment allows project developers to tie up for only 65 per cent of generation capacity through competitive bidding with the State distribution utilities against the earlier norm of 85 per cent.
The amendment allows the developer to sell up to 35 per cent of installed/net capacity under regulated tariff as per the specific host State policy. This dispensation would be one time and limited to 15 projects located in the States having mandatory host State power purchase policy under regulated tariff. States such as Odisha, Chhattisgarh and Madhya Pradesh insisted on buying up to 25-30 per cent of electricity from power stations for their respective States. The Government has also extended the maximum time for furnishing final mega certificates to tax authorities to 60 months instead of 36 months from the date of import for provisional mega projects (25 projects).
The Mega Power Policy was introduced in November 1995 to provide impetus for setting up of large projects. Thermal power projects of 1,000 MW and hydel plants of 500 MW are eligible for benefits under the policy. The policy has been modified time and again to encourage development of the sector.
It will also benefit supercritical projects that are awarded through international competitive bidding with the mandatory condition of setting up indigenous manufacturing facilities.
Development fund
The Cabinet also approved setting up of Power System Development Fund (PSDF). The projects taken up to strengthen the electricity transmission grid can source funding from this Rs 6,000-crore facility.
“The utilities that break grid discipline pays fine. Part of the fine is paid to compensate any utility that encounters losses. Currently, about Rs 6,000 crore has been accumulated in the fund, which would now be utilised for grid strengthening projects,” a senior Power Ministry official told Business Line.
Powering ahead Will encourage setting up of large power plants Simplify procedure for grant of mega certificate, encourage capacity addition Power System Development Fund to be used for creating necessary transmission lines Renovation and modernisation of transmission and distribution systems to relieve congestion Fund to be operationalised within three months
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