Equal JVs between private, public companies dsallowed

The Union Government has come up with new PPP guidelines according to which 50:50 JVs will not be allowed between a private firm and a government company in the infrastructure sector. The move aims to fix responsibility of the project with the majority owner and prevent a deadlock on matters of public interest. The equity stake will also define public or private character of the JV.

The new rules also prohibit regulators and government entities such as Port Trust, Airports Authority of India, Railways, and NHAI from undertaking construction and management of PPP projects through JVs.

The new guidelines prevent a 50:50 JV between private and public entities as well as public and public entities; as such shareholding pattern creates confusion over accountability and escapes scrutiny from government agencies.

CERC revives transmission links regulations for private power companies

The Central Electricity Regulatory Commission (CERC) has revealed medium-term open access regulations to ensure adequate transmission links for new power plants. The main idea behind the new norms is to introduce transmission corridors for even those transactions which fall in the category of three months to 25 years.

The new regulations will provide a "non discriminatory arrangement of transmission", which means facilitation of the grid, irrespective of ownership of the power plant.

Besides, the new rules identify PGCIL as the nodal agency for providing transmission linkages for open access for transferring power through the grid. Traditionally, setting up of a power generating station requires a finalised PPA right from the beginning.

However, under the new norms, power plants will get transmission facilities just by indicating the region in which the power is to be supplied, in case the beneficiaries are not clearly identified.

Another major feature of the rules is that PGCIL is expected to provide grid connectivity to all the thermal power plants with at least 500 MW capacity and hydro plants with at least 250 MW capacity, irrespective of being state-owned or private sector-owned.

These regulations are likely to come into effect after two-three months when PGCIL submits the detailed procedure of implementing the new regulations, following which applications are expected to be invited from private developers for grant of open access to the transmission system.

Government to introduce new clauses for road projects

The Union Ministry of Road Transport & Highways is likely to introduce a new clause for the construction contracts of 500 km highways worth Rs 4,000 - 5,000 crore each. The move is to draw more and more best practices, contractors and investors into the highways sector of the country.

This project is likely to have concession period of 30-50-year range. In case a foreign player comes in, the company will have to engage firms in India for the work.

Initially, the ministry is expected to take up sixlaning of the 558 km Kishangarh-Udaipur- Ahmedabad section on a DBFOT basis. The highway project is estimated to cost Rs 4,284 crore. The project might also have relatively relaxed exit clauses for the concessionaire. Besides, it will require Cabinet approval.

Earlier, the NHAI was planning to take up six-laning of the Kishangarh-Udaipur stretch (315 km at an estimated cost of Rs 2,534 crore ) as one project and the Udaipur-Ahmedabad segment (235 km at Rs 1,750 crore) as another. But the bids for both the projects were called off as the bidders had sought higher levels of viability gap funding than what is permitted for four-to-six-laning of highway projects.

Norms to be reviewed for capacity utilisation at ports

The Union Ministry of Shipping is mulling over a proposal to allow major port authorities to use a facility developed and operated by a concessionaire if the facility is idle and not being used to earn revenues.

The said proposal is likely to enable maximum use of a port's capacity and provide improved services to port users. Similarly, the proposal also suggests allowing the concessionaire to use idle port facilities on a temporary basis.

The Shipping Ministry has set up a committee to recommend steps to increase the efficiency of ports. The committee has pointed out that there is a need to have guidelines that will allow a concessionaire to use idle facilities of the port authority and, conversely, also allow the port authority to use the idle facilities of a captive or private player. This will be above and beyond the revenue share and the BOT operator shall pay to the port other vesselrelated charges including berth hire charges and wharf age charges. The arrangement could be allowed for a maximum of one month.

Besides, the committee has suggested that in case the port is heavily congested and the facilities cannot be used by the concessionaire, the port shall have the right to use captive facilities for handling cargo by following its own notified berthing procedure. In such a case, the concession agreement shall also specify the amount to be paid to the concessionaire for handling port cargo in its facilities.

While the committee has recommended that the formula for such charges in the concession agreement should be evaluated by the Finance Ministry, it has indicated that whenever the port uses the facilities of a private operator, the port would pay no more than 75 per cent of revenueshare of handling charges.

New norms on land acquisition for SEZs

The Union Ministry of Commerce has released a series of guidelines, which seek to partially relax land acquisition norms for SEZs by state governments.

As per the new set of guidelines, released on 18 August 2009, states will be allowed to acquire land for SEZs if land owners have withdrawn or not filed objections towards the move. At the same time, the landowners will also have to give their consent to state governments. In April 2007, an empowered group of ministers had banned compulsory acquisition of land by state governments for SEZs amidst mass protests in Maharashtra and West Bengal.

The new guidelines also reaffirm that if owners have any objections to the acquisition of land by states for SEZs, the inter-ministerial board of approval on SEZs will not consider such cases.