No import duty on Chinese power equipment

The Union Government on 22 April 2010 decided not to levy new duty on imports of Chinese power equipment. The government had discussion with the stakeholders on the issue and it was decided to maintain the current level of duty on power equipment imports.

At present, five per cent customs duty is imposed on equipment imported for projects awarded through the ICB process, while there is no duty on power equipment sourced for mega projects with a capacity of 1,000 MW and above.

Idle acquired land to be given back to original owner

In the draft National Highways Amendment Bill 2010, the Union Ministry of Road Transport and Highways has proposed a clause that says if a planned road is abandoned, the original owner will reserve the right to buy back the land by returning the money paid by the government for the purchase. Further, the owner will not have to pay the appreciation price but only that received when he or she sold the land. However, if the owner declines to buy back the land at the price paid by the NHAI at the time of acquisition, the land will be open for selling to other interested buyers.

The new practice is likely to be followed by the NHAI for all national highway projects in the country.

Railways mull four models for PPP in expansion

The Indian Railways (IR) has mooted a scheme - Railways Infrastructure Initiative for Industry (R3i) - to develop the rail lines with focus on offering incentives to the private sector to work in tune with the IR. Under the R3i, the IR is likely to implement four PPP models - cost-sharing freight rebate, full contribution, SPV, and private line - for network expansion.

As per the cost-sharing freight rebate model, the contribution of the applicant should not be less than 50 per cent. The applicant is likely to recover its investment through a rebate of 10-12 per cent on incremental traffic. This is to be valid till the advance contribution made by it is recovered or for a period of 10 years, whichever being earlier. However, this is subject to the condition that 30 per cent of the advance should be recovered within the first five years after the commissioning of the line.

In the full contribution apportioned earning model, the applicant is expected to make 100 per cent contribution to the project cost. The applicant will construct and maintain the line for a period of 25 years. The IR is likely to levy a licence of two per cent from the applicant's share of earnings net of operations and maintenance costs for the first ten years from the date of commissioning and four per cent thereafter till the completion of 25 years. Under the SPV model, the IR's share in the SPV is likely to be 26 per cent. The private line model will be applicable when a private line is built by the applicant on privately acquired land and connectivity is sought to the IR's network. The applicant will construct and maintain the line for a period of 30 years and pay licence fee of two to four per cent to the IR through the period.

Government may relax land contiguity norms for SEZs

The Union Government is likely to issue a draft policy soon to relieve the mandatory land contiguity norms for setting up SEZs, a move that may bring down the cost of such projects.

The inter-ministerial Board of Approval (BoA) has asked the Union Ministry of Commerce to formulate the draft policy.

Contiguity of land is a prerequisite for notifying a piece of land as an SEZ. Establishing contiguity means building under-passes or flyovers to link two pieces of land bisected by a highway or a water body.

Government puts gas highway authority plan on hold

The Union Ministry of Petroleum & Natural Gas has put the proposal to create a national gas highway development authority on hold.

The decision has come in the wake of opposition from the Petroleum and Natural Gas Regulatory Board (PNGRB), which currently has the powers to authorise pipelines.

In the Budget speech of 2009, the Union Government had proposed to develop a blueprint for long-distance gas highways, leading to a national grid to facilitate transportation of gas across the country. In December 2009, the ministry had circulated a draft note among various ministries and departments to seek responses.

PNGRB has reportedly opposed the proposal, as a gas highway authority will have curbed the board's power under PNGRB Act to authorise entities to lay, build, operate or expand city or local natural gas distribution network.