New parameters for power generation, transmission shortly

The Central Electricity Regulatory Commission (CERC) is likely to introduce new parameters for determining the cost of generation and transmission for thermal power projects. At present, the power industry considers Rs 4 crore per MW for determining the cost of projects and tariffs are determined based on this and transmission expenses. However, the new proposed norms are expected to be technology and fuelsensitive and would be decided keeping in mind the unit size. The parameters are likely to be set by a consortium of consultants including KPMG. Meanwhile, the CERC is also in favour of fixed capital cost for renewable energy projects such as small hydro, biomass, solar and wind units as well, and a draft regulation for the same is likely to be notified in a week.

Raise in viability funding for NHDP-V likely

The Union Government is considering a proposal to increase the VGF for certain projects under the National Highway Development Project - Phase V (NHDP-V) due to poor response to the first few projects it received in December 2008. So far of the 6,500 km of highways proposed under NHDP-V, only 3,700 km have been awarded. NHAI failed to find developers in the last fiscal as bidders demanded a higher VGF. For NHDP-V which includes six-laning of the Delhi-Agra highway, the VGF on individual projects was capped at 10 per cent of project cost and was supposed to average 5 per cent for the entire phase. In April 2009, however, a meeting of a committee of secretaries under the chairmanship of the cabinet secretary, allowed the Public-Private Partnership Appraisal Committee to consider revising the upper limit on a case-by-case basis.

SEZ approval to be simplified

The Ministry of Commerce & Industry has initiated steps to lessen the time taken to develop SEZs by simplifying procedures to get the tax-free industrial enclaves notified. Developers are now expected to be able to get their land classified as an SEZ at the initial stage of approval by submitting legal documents that prove land ownership. In the past, formal approval - the first step in notifying an SEZ - was based on a statement by a developer confirming possession of land. Thereafter, the developer had to submit a series of documents including proof of ownership of land, a nonencumbrance certificate etc to get the zone notified. However, as per latest development all these documents are likely to be submitted at the first stage. This step will help serious zone developers since only firms that actually own land will now apply and will also ensure quick investment flow in to the zones

NHAI seeks permission to use negative grant in road development

The National Highways Authority of India (NHAI) has reportedly put forward a proposal to the Union Government seeking permission to use Rs 1,352 crore received as negative grant (upfront payments by bidders) till date under various highway projects. As soon as the government finalises modalities the NHAI will start using the funds. Earlier, the Committee on Infrastructure had agreed that the negative grant from BOT projects should be ploughed back for development of highways. The government is known to have asked NHAI and the Department of Road Transport and Highways to bring up revised proposal to it after considering the proposal in April 2009.