Annuity based PPP projects to come under FRBM

The Union Government is likely to bring annuity based PPP projects under the fiscal responsibility framework in the Budget to ensure they do not become a big burden in the future.

These projects are likely to come under the Fiscal Responsibility and Budget Management Act (FRBM Act). To begin with, the government is likely to introduce all Union Government PPP projects in the Budget document.

The annuity based projects involved promise of deferred payments by the government that may not show up in its current fiscal accounts, but will create a larger burden in the future. Appropriate disclosures of liability on account of such projects will help government keep them in check. The Planning Commission has already circulated a draft note in this respect.

Draft mining Bill gets GoM nod

The Group of Ministers (GoM) on 3 December 2010 approved the draft mining bill. The bill will provide for sharing 26 per cent of company profits with local populace in mining projects.

In order to address the concerns of resource-rich states like Jharkhand and Orissa over adequate compensation and traditional rights over minerals, the GoM has asked the Union Ministry of Mines to strengthen the clause that provides for competitive bidding for grant of mining leases.

The approved draft is now to be sent to Pranab Mukherjee, Union Minister for Finance, for his final approval after which it will be placed before the Cabinet.

EPC contractors to maintain roads for three years

The Union Ministry of Road Transport & Highways has made amendments in the Standard Bidding Document for EPC projects.

As per the amendments, the Defect Liability Period has been increased to three years from the present one year i.e. the contractor executing National Highway projects will now have to maintain the works for three years.

The changes have been made as there were concerns that some works completed under contracts as per Standard Bidding Document have shown signs of premature failure or damages.

Single green nod likely for integrated projects

The MoEF is mulling over a proposal relating to environmental clearance for integrated projects. In this regard, the ministry has asked for a common environment impact assessment report from integrated and inter-linked projects with multisectoral components. The report will cover "impact of each of the components after obtaining terms of reference from each of the respective sectoral expert appraisal committees."

Presently, the project developer is not compelled to provide the full impact of the entire project. However, while one component of an integrated project receives clearance and the pressure then builds up to clear another component.

Now, the project developer will have to submit in its application to each of the relevant sectoral expert appraisal committee full details of each component of the project, irrespective of the fact that some of the elements may not be developed at the start of the project. The final clearance for the project will be taken up for consideration only after all the individual sectoral expert appraisal committees submit their recommendations.

Approval sought for mining in 90 per cent of 'no-go' areas

The Union Ministry of Coal has sought approval from the Union Government for its proposal that mining be allowed in 90 per cent of coal blocks labelled as 'no-mining' areas by the MoEF.

As per sources, 206 coal blocks spread across 4,039 sq km in nine coalfields involving a production potential of 660 million tonne have been designated as 'no-go' areas whereas the coal ministry wants 90 per cent of these to be freed from the restriction.

Fresh curbs await UMPP projects

The Union Government is likely to put up restrictions on future ultra mega power projects (UMPP). The government is likely to make it mandatory for bidders of future UMPP projects to buy power equipments only from the firms which have manufacturing base in India. Foreign equipment suppliers to the projects will have to agree to set up a manufacturing base in a phased manner.

A standing committee with members from the Union Ministry of Power and Heavy Industries will monitor the phased manufacturing programme. If approved, the proposal is likely to impact eight proposed UMPP projects, the bidding process for which has not been initiated yet. However, the proposal will not be applicable to similar projects in Chhattisgarh and Orissa, the bidding for which has already been initiated.

Supercritical tech likely to be must for coal power plants

Union Government is mulling over a proposal which may help to fight climate change by cutting down emission of greenhouse gases.

The government is likely to make it mandatory for power companies to switch to energy-efficient supercritical technology for their upcoming coal based power projects.

The government is expected to announce a new policy soon for mandatory use of supercritical technology based power projects. As adoption of new technology for all projects is a timeconsuming process, the government wants this to start from the 13th Five-Year plan period starting from 2017.

Coal based power plants based on supercritical technologies are less polluting than conventional plants. The energy efficiency of these plants is 45 per cent against 30-32 per cent for conventional plants.