Electricity

CERC announces new tariff regulations

Central Electricity Regulatory Commission (CERC) issued tariff regulations for generation and transmission projects for the period 2009-14 on 20 January 2009. The new regulations will also be the guiding principles for the State Electricity Regulatory Commissions. With the announcement of new norms, CERC hopes to attract the desired investment in power infrastructure in the country while ensuring that the consumers get electricity at reasonable cost.

Government to make consumption of green power mandatory

Mega power policy norms amended

On 1 October 2009, the Union Government gave its consent to the amendments in the existing Mega Power Policy. The policy covers thermal power plants with a capacity of 1,000 MW and hydro plants with a minimum capacity of 500 MW that sell their power through long-term PPAs. In case of projects located in Jammu & Kashmir and the northeastern states, the qualifying limits are 750 MW for thermal power plants and 350 MW for hydro projects.

The new policy allows the developers, who will be selling their power through a tariff based bidding process, to avoid the international competitive bidding process to procure equipments.

The amendment allows all states to purchase power from mega power plants. Earlier, only those states that were committed to privatising their distribution utilities in cities within a fixed time period were allowed to procure power from mega power plants. The new rules also allow large projects serving only host states to enjoy the benefits extended to mega projects.

Further, captive power projects and merchant projects have also been brought under the purview of the policy. The latest modification allows plants of this category to sell some part of their capacity through merchant route.

Government proposes solar power for SEZs

The Union Government has drawn up a draft proposal which states that all SEZs should meet at least 25 per cent of their lighting needs through solar energy, a move that will go a long way in making SEZs green.

Bio-fuels policy approved

The Union Government has approved the National Policy on bio-fuels to facilitate optimal development and utilisation of indigenous bio-mass feed stocks for production of bio-fuels. According to the policy, bio-diesel production is likely to be taken up from non-edible oil seeds in waste /degraded/marginal lands. It envisages an indicative target of 20 per cent blending of biofuels, both for bio-diesel and bio-ethanol by 2017.

Mining

Companies may be allowed to mine & sell coal through PPP route

The Union Ministry of Coal plans to open up commercial coal mining activities in the country by allowing private companies to form JVs with staterun firms such as Coal India, NTPC and the mineral development corporations of various state governments. As of now, private companies are only permitted to mine coal for their captive consumption.

Infrastructure

Union Government amends Land Acquisition Act

The Group of Ministers (GoM) headed by Sharad Pawar, Union Minister of Agriculture, has cleared the proposed amendments to the Land Acquisition Act and the Rehabilitation and Resettlement (R&R) Policy. The Union Government has retained the 70:30 formula for land acquisition for industrial projects which will allow states to acquire 30 per cent of land for private developers provided they have acquired the remaining 70 per cent for setting up industrial and SEZ projects.

New PPP norms to keep away frivolous bids

The Union Government has enhanced the entrance technical capacity of bidders to twice the estimated cost of projects under the PPP model. The Union Ministry of Finance revised the RFQ norms for such projects on 21 June 2009.

As per the new norms, if a developer is bidding for a PPP project worth Rs 500 crore, it should have a record of executing projects worth Rs 1,000 crore, or at least double the cost of the new project. Earlier, to qualify, a developer needed to have executed projects one-and-a-half times the cost of the proposed project in the last five years. The tightening of qualification norms is likely to attract serious bidders.

Equal JVs between private, public companies disallowed

The Union Government has come up with new PPP guidelines according to which 50:50 JVs will not be allowed between a private firm and a government company in the infrastructure sector. The move aims to fix responsibility of the project with the majority owner and prevent a deadlock on matters of public interest.

The new guidelines prevent a 50:50 JV between private and public entities as well as public and public entities; as such shareholding pattern creates confusion over accountability and escapes scrutiny from government agencies.

No more in-principle approvals: MoEF

The MoEF has reportedly eliminated the system of in-principle approvals, to abolish the practice of launching projects without obtaining the final clearance. According to the ministry, industrial projects in ecologically sensitive areas, like the Western Ghats, will not be cleared unless their impact on the environment had been studied in totality.

Union Government issues guidelines for Caravan, Heliport tourism

The Union Ministry of Tourism has issued guidelines for development and promotion of Caravan, Wellness and Heliport tourism. Under the guidelines, the Caravans will be popularised and promoted by developing Caravan Parks under PPP mode. The Caravan Parks are to be approved by the ministry once they develop the minimum required facilities such as parking bays, tourist amenities centre, landscaping, toilets and adequate measures for safety and security of tourists.

NHAI formulates new norms for bidders

On 12 June 2009 the NHAI board decided to issue the LoA to a highway developer only after the developer has acquired 80 per cent of the land required for the project. Further, the remaining 20 per cent will have to be acquired within 90 days of the project award.

MoEF's new rule brings private port projects to a standstill

The private ports which are being developed under the jurisdiction of the state governments are likely to be affected due to the MoEF's order to halt the construction of new ports in India. The MoEF had instructed a committee to recommend changes in the draft Coastal Management Zone notification, 2008, in order to keep a tab on the consequences that increasing industrial activity is having on the coastline of the country.

Prevent rival private ports from bidding for major terminals

A committee set up by the Union Ministry of Shipping has recommended that there is a need to have a policy that prevents competing private ports from bidding for operating terminals in major ports under the PPP policy. Such a policy will promote inter-port competition and also prevent private ports from diverting high-value cargo from major ports by operating a terminal within the major port under the Union Government's jurisdiction. Under the PPP policy, the terminal operator in a major port is required to meet a minimum throughput per annum and shell out certain share of revenues to the port trust.

Special Economic Zones (SEZs)

SEZ approval to be simplified

The Union Ministry of Commerce 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 get their land classified as an SEZ at the initial stage of approval by submitting legal documents that prove land ownership.

The Union Government has also approved stamp duty waiver for SEZ developers on land purchases within the notified area for non-core activities such as building hotels, housing complexes, shopping malls and golf courses.