No bidding for coal blocks for state mining utilities proposed

The Union Government is mulling over a proposal which is likely to keep government companies, state-owned mining corporations and tariff-based power projects, including ultra mega power projects out of the proposed competitive bidding process for captive coal blocks.

In case the proposal gets through, it will allow these entities to get coal at below market prices. However, other users of coal will have to bid for coal blocks.

According to sources, if government companies such as Coal India, NTPC and other state mineral corporations are exposed to bidding it will ultimately result in higher price of coal for consumers. Moreover, tariff-based projects will not be able to offer competitive tariff to consumers if their fuel cost goes up due to another round of bidding for coal blocks. At present, coal blocks are allocated to entities in steel, power and cement sectors for captive use by a screening committee headed by the coal secretary. The screening committee awards a coal block based on the financial strength, preparedness and nature of the coal use proposed by a company.

Mega power policy norms simplified

On 1 October 2009, the Union Government has given its nod for amendments to the existing Mega Power Policy. The revised norms are aimed at simplifying the procedure for granting mega certificate for projects and encouraging indigenous manufacturing in the field of super-critical power equipment.

The amended norms include scrapping the condition that required a mega power project to sell electricity to more than one state. The clause on inter-state power sale has been done away in view of a multi-fold increase in demand across states, which now makes it possible for large industrialised states such as Maharashtra, Tamil Nadu and Gujarat to consume all of the electricity that a mega project can generate.

Under the new rules, states purchasing power from mega projects will not be required to privatise their distribution utilities to qualify for the fiscal sops under the scheme, as was mandated earlier. Instead, they need to undertake to carry out distribution reforms as laid out by the Union Ministry of Power. The modifications to the policy includes the withdrawal of the 15 per cent price preference for domestic equipment makers bidding for projects being executed by public sector companies under tariff-based competitive bidding process. However, the 15 per cent price preference will continue for domestic bidders in the case of cost plus projects being set up by public sector companies.

The threshold size requirement -1,000 MW for fossil fuel-fired plants and 500 MW for hydel units - for projects to qualify for the mega power benefits has, however, not been tinkered with. While the term 'mega' project denotes stations that qualify under the Mega Power Policy criterion, the new term of 'Ultra Mega Power Projects' has been coined for a slew of generation plants that are coming up across the country, which have a minimum size of 4,000 MW each.

NHAI nod for few restructured projects

The Union Government is likely to set up a national gas highway development authority on the lines of the NHAI.

The Union Ministry of Petroleum & Natural Gas is likely to seek an in-principle approval from the Cabinet for setting up the authority. It has circulated a draft note to seek comments from other ministries.

The proposed authority will undertake issues related to planning and funding of the gas highway. The idea is to set up national gas highways, so that as and when gas becomes available either through imports or domestic sources, it can be distributed. Various modes of funding are being looked at, including PPP, government grant and external aid.

NHAI to pare time taken for land buys

The Union Government, in its bid to expedite road projects, is likely to halve the time it takes to acquire land for road projects. The move is expected to save about 10 per cent of the total project cost.

The NHAI is planning to bring down the land acquisition time to 11 months which currently takes 24 months. This in turn will help to reduce the time taken for building a road - a process that currently takes five years from conception, design, and identifying land, acquiring it and calling for bids once 80 per cent of the land is available.

Besides, the NHAI is setting up special land acquisition units all over the country under the responsibility of state government officials on deputation to the authority.

Currently, state administrations are responsible for acquiring land for road projects. In all, 10 such units are coming up in Rajasthan, 13 in Bihar, 25 in Uttar Pradesh, seven in Gujarat, 11 in Orissa, 13 in West Bengal, 11 in Maharashtra, four in Jharkhand, and five in Assam. Around 40 are already operational in Tamil Nadu and Karnataka and sanction has been received for Goa.