Government may reach over consensus on 'go' areas for CIL

The disagreement between the Union Coal Ministry and the MoEF over the classification of 'go' and 'nogo' areas for CIL, is likely to be resolved soon.

The Ministries have embarked on a joint exercise to identify areas for which the MoEF may consider diversion of forest land for coal mining purposes. Final decision is expected by end-August 2010.

According to sources, the Coal Ministry is insisting on a reclassification of the forest areas into 'go', 'nogo' and 'may go' areas. While the 'no-go' areas will remain permanently free from coal mining activities; access to the 'may-go' areas could be given after investigation. It has also stressed on a mandatory 'fast track' environmental clearance (within 300 days as against the existing practice of taking 4-5 years for granting such clearances) for the 'go' areas so that mining can commence at the earliest.

The Ministry opines that a fast-track clearance will free a large chunk of the mineable coal reserves in the country for immediate commercial exploitation, to keep up with the increasing demand for coal from the power sector.

Industrial Policy for Delhi unveiled

Sheila Dikshit, the Chief Minister of Delhi, on 4 August 2010, unveiled the new industrial policy for the state. The state government's aim was to make Delhi a hub of pollution-free, high-technology and knowledge-based industrial activities.

Some of the salient features of the policy are

Gas allocation policy may be tweaked

The Union Government is considering amending the gas allocation policy that says that stateowned companies cannot start project before securing fuel linkage.

As per the Department of Public Enterprise guideline, state-owned companies cannot order equipment and begin construction activities before securing fuel linkage for the projects. Private developers can begin work even before getting gas linkage putting them ahead in terms of work done, a key consideration in gas linkage, putting the state-owned power developers at a disadvantage.

The amended rule is likely to benefit NTPC, as several of the proposed gas based power projects are stranded. Some of the projects to benefit are expansion projects of 1,000 MW each at Badarpur (Delhi), Auraiya (Uttar Pradesh), Faridabad and Dadri (Haryana), and a 2,000 MW expansion project of Ratnagiri Gas and Power.

Government not to alter private participation norms in nuke plants

The Union Government has decided not to permit private firms to set up nuclear power plants independently thus rejecting the recommendation of the Prime Minister's Economic Advisory Council that the nuclear power sector be opened up.

The private sector will have to be content with being a minor partner in state-run enterprises setting up nuclear power plants. The government does not intend to modify the related provision of the Atomic Energy Act, 1962, for private participation in setting up of nuclear power plants. The 1962 Atomic Energy Act permitted private participation in setting up of nuclear power plants as "a minor partner of a government company". The act, amended in 1987, "empowers the Union Government alone to develop, use and dispose of atomic energy either by itself or through any authority or corporation established by it or a government company".

NHAI asked to revert to old rules

The Union Ministry of Finance has asked the NHAI to revert to the previous regime of awarding contracts instead of the new bidding norms for the roads sector.

The new guidelines set by NHAI barred a company from bidding for new projects if it has already won three road projects but not achieved financial closure. The new rules also imposed restrictions on sub-contracting, saying that only those contractors that have completed at least one project of more than 20 per cent of the cost of project being subcontracted or Rs 500 crore, whichever is less, will be eligible.

The new rules instead of distributing projects across more developers and reduce the risk of execution, discriminated against the big players, as it was seen to restrict them to a few projects at a time despite having the capacity to do more.

NHAI may alter funding model for road contracts

The NHAI is mulling over a proposal to relax payment schedule for private contractors. The Authority is likely to give 40 per cent of the annuity payment to the contractors upfront and the remaining amount later in instalments. It is likely to discuss changes in the funding model for annuity projects and switch to a model suggested by the World Bank (WB) in its meeting soon.

NHAI is in the process of negotiating a $2-billion loan from the World Bank for viability gap funding (VGF) for projects and annuity payments. The VGF model for projects on the BOT-toll mode entails the government paying subsidy to make the project viable for an operator.

In the BOT mode where payment is linked to annuity, a private contractor builds the road and recovers its cost after the completion of construction from the government in instalment. Switching to the new model where a higher amount is paid by the government initially could reduce the debt burden on the private builder. However, paying a higher amount upfront could lead to increase in the government's expenditure.

Till now, funding from the WB for the National Highway Development Project has been restricted to EPC projects costing over Rs 4,000 crore. In an EPC project, the government builds the road through a contractor.

Union Ministry of Shipping

The Union Ministry of Shipping plans to introduce a new maritime policy expected to be finalised in September 2010. It will replace the existing National Maritime Development Programme (NMDP).

The new plan will have a 10-year validity beginning this year (2010) and extending up to 2020. The new policy will include a framework for stimulation of capacity expansion as well as growth of the maritime sector and supplementary projects for ports development from other infrastructure ministries like the NHAI, railways, inland waterways, dredging mechanisation and modernisation plan of major ports and non-major ports.

The new plan is also likely to focus on coastal shipping which has an immense business potential.