Orissa captive power policy soon

The Orissa government proposes to formulate a new policy for the captive power plants (CPPs) operating in the state, by June 2007.

Such a policy has been necessitated following the growing tendency among CPPs to sell their surplus power to third party instead to the state grid, with a motive to earn more profit. Under the proposed policy, the captive power plants will be asked to sell power to the state utilities, instead of exporting power to other states. Moreover, this is expected to make the captive power plants accountable to the state utilities.

The Orissa government has signed an MoU with 13 independent power producers (IPPs), for generating 16,800 MW of power. Non-allotment of coal blocks by the Centre is cited as the main reason for slow progress of these projects. Also, eagerly awaited is the 1000 MW power plant, to be jointly set up by the Orissa Hydro Power Corporation (OHPC) and Orissa Mining Corporation (OMC), to meet the power requirements of the state. The project is yet to get a coal linkage and its site has also not been finalised.

Open Acreage Licensing Policy soon for oil & gas blocks

The Central government is close to finalising an Open Acreage Licensing Policy (OALP), which will allow companies to pitch for oil and gas blocks of their choice.

The launch of OALP will also make NELP-VII as the last New Exploration and Licensing Policy (NELP) round.

Typically, the open acreage licensing proves better for countries where hydrocarbon resources are few. The OALP allows investors a continuous window for exploration opportunities wherein, they have the flexibility to choose the areas for carrying out exploration work. All open acreages are put on a grid system and are available for offers by interested companies.

Government unveils PCPIR Policy

On 08 May 2007, the Integrated Petroleum, Chemicals & Petrochemical Investment Regions (PCPIRs) policy was unveiled by the government. The policy is aimed at boosting the manufacturing sector, increasing exports and building the sector to become globally competitive.

According to the policy, a PCPIR will be a specifically delineated investment region, with an area of around 250 sq.km planned for the establishment of manufacturing facilities for domestic and export led production, in petroleum and chemicals. The minimum processing area for the PCPIR will be about 40 per cent of the total designated area, which is about 100 sq km. Each of such regions will be set up at an estimated cost of Rs.40,000 crore. The government would spend around Rs.10,000 crore in providing physical infrastructure for these regions.

The policy will give a thrust to industrialisation within these regions, by way of setting up downstream units, in turn, leading to the development of socioeconomic infrastructure in areas within and around the regions.

New MCA for development of ports

The Department of Shipping has decided to prepare a completely new Model Concession Agreement (MCA), for development of ports.

The decision is the result of a number of unresolved issues between the Department of Shipping and the Planning Commission, relating to various clauses of the MCA. The new MCA draft is expected to be ready within the next few months.

Although, the Department of Shipping agreed to the Planning Commission's proposal of introducing a normative model for tariff fixation, in which, the current cost plus tariff mechanism system would be used with a financial cap on it, the two disagreed on other terms and conditions of the MCA. Some of the main issues included the criteria of performance-based indicators for ports and making the escrow accounts mandatory for concessionaires.

Hydel policy for J&K soon

The Kashmir government is soon planning to formulate a new hydel policy, to expedite the execution of power projects under the IPP scheme, as also to involve private sector JV schemes under RGGVP, for rural electrification and creation of sub-divisions under the yojana.

It is learnt, that under the Independent Power Project scheme (IPP), 18 out of the 25 small hydroelectric projects proposed by the State government, having a total capacity of 97 MW, have been sanctioned. These projects having capacities ranging from 1.20 MW to 15 MW, are being constructed in Gulbargh, Mawar, Boniyar, Arin, Sranz, Aroo, Bringi, Bhalla, Alalgard, Chandanwari, Nihama, Girjan ki Gali, Phagla and Wangat.

Under the yojana, Rs.14.54 crore has been earmarked for Varmul and Rs.19.25 crore for Pulwama district, Rs.29.61 crore for Rajouri, Rs.17.32 crore for Poonch and Rs.35.30 crore for Doda district. Under the RGGVY, Rs.48 crore is being spent in the Kupwara district and Rs.24 crore in Islamabad district for rural electrification, while five additional districts of the state including Varmul, Pulwama, Rajouri, Poonch and Doda, are being covered under the RGGVY with project reports currently in the pipeline.

Revised FDI norms to be announced by July

The revised FDI norms which are expected to impact several sectors like Telecom, Real Estate, Banking and Retail, are likely to be announced by July 2007.

It is learnt that all revisions in regulations were likely to be effective from the date of announcement.

The annual review, which normally follows the budget presentation, has been delayed, as inputs from the ministries have not yet been received. Consultation between the various ministries on foreign investments is in progress, and is expected to be completed soon.

New water and IT policy by June

Rajasthan government is expected to announce new Water and Information and Technology policies, by June 2007.

The comprehensive water policy is expected to be in place by September 2007, while a waste water treatment plant has been proposed in the Jayal tehsil in Nagaur district, under public-private partnership (PPP) on BOT basis.

The Information & Technology Policy is also on the anvil and is expected to be announced by June 2007. The Rajasthan government has given the final touches to the linking of rivers of Parvathi-Kali-Sindh-Chambal-Banas in Madhya Pradesh, and the final draft for the same is ready for approval.

Centre approves two-stage bidding for PPP projects

The Committee on Infrastructure (CoI) under the Prime Minister, has approved a common set of guidelines framed by the Finance Ministry in consultation with the Planning Commission, for shortlisting bidders for the PPP projects.

All public-private-partnership (PPP) projects in the infrastructure sector including Roads, Railways, Airports and Ports, will necessarily have to follow a two-stage bidding process, for shortlisting bidders at the pre-qualification stage.

Most of the large projects which are undertaken on a PPP basis, follow a twostage bidding process involving the technical and financial bid. However, several projects in the roads sector, for instance, skip the two-stage process. The guidelines aim at eliminating the element of subjectivity, in analysing technical proposals at the pre-qualification stage and bidders will essentially be shortlisted on the basis of their capacity to undertake the project, their past experience and financial capability.

The guidelines also call for restricting the number of shortlisted bidders in the pre-qualification stage to five, especially in the case of large projects.

SEZ rehablitation policy might be delayed

The Resettlement and Rehabilitation Policy for mandatory rehabilitation of land owners displaced by industrial projects and SEZs, might be delayed, as the matter is being referred to a Group of Ministers (GoM).

The proposed policy has been drafted by the Union Rural Development Ministry, in the backdrop of protests in Nandigram and Singur in West Bengal and Raigad in Maharashtra. The Law Ministry is understood to have completed the final draft of the rehabilitation package, comprising of an amended Land Acquisition Act, a rehabilitation policy and a rehabilitation law.

Petroleum ministry may seek changes in Exim Policy

The Petroleum Ministry plans to seek changes in the Exim Policy, allowing refiners with export-oriented unit (EoU) status to sell LPG with deemed export benefits.

Reliance Industries (RIL) expressed its apprehensions, that unless the international competitive bidding process is adopted, it could be denied duty exemptions on raw material imports. The Petroleum Ministry has directed OMCs such as Indian Oil Corporation (IOC) to examine the changes suggested by RIL in the Exim Policy, before approaching the Commerce Ministry.

The recently acquired EoU status will exempt RIL from paying local taxes, making it eligible for zero duty on crude imports for the refinery. After acquiring the EoU status for its Jamnagar Refinery, RIL approached the Petroleum Ministry with a proposal to supply LPG to state-owned marketing companies under the global bidding route, as required under the Exim Policy. But the proposal was opposed by OMCs, as a positive net foreign exchange status could be achieved by the refiner through LPG supplies to PSU marketing companies, which are entitled to duty free import of the product under the General Exemption Notification issued by the Finance Ministry.

The OMCs also argued, that the infrastructure currently available, was inadequate to import an additional quantity of 2.6 million tpa of LPG being supplied by RIL. Besides, the OMCs will end up incurring additional costs in case domestic supplies from RIL are replaced by imports.

Aviation reforms targeted by July 2007

The Central government has targeted to complete a series of reforms in the civil aviation sector, by July 2007.

The measures proposed include the finalisation of licensing conditions for private greenfield airports, setting up the Airport Economic Regulatory Authority and finalisation of a draft Civil Aviation Policy for Cabinet approval.

The proposal to set up an Airport Economic Regulatory Authority has already been submitted for Cabinet approval. Another key measure which will be dealt with is the draft of the Model Concession Agreement for developing airports.