Ministry seeks changes in mega power policy

This will make getting "mega status" easier for companies like Torrent and Jindal Power.

The power ministry has sought changes in the mega power policy regime. This is likely to make getting a "mega status" easier for companies like Torrent and Jindal Power for their projects.

For a project to get the status, the state to which it sells power has to agree that in case of a default on payments, the dues can be deducted from its central allocation. This condition is laid down in the Customs notification. The power ministry now wants this clause removed.

For private players, the condition is difficult to fulfill because states will not agree to provide payment security to them. On the other hand, public sector companies, covered under a tripartite agreement with the Centre and states, will easily fulfill the condition.

Torrent and Jindal Power have proposed to set up a merchant plant, power from which will be sold by the Power Trading Corporation.

But the states to which power will be sold have not yet been identified. This is keeping the plant from getting the "mega status" for itself. The impasse can be broken if the clause is dropped.

With a "mega status", a project gets a 5 per cent Customs duty and 16 per cent countervailing duty exemption on import of equipment. However, to date, no project has got benefits under this policy.

When it was introduced in 1995, concessions were offered to 19 projects, of which only four "" all in the public sector ""are coming up. In 1998, the policy was made more general. However, in an attempt to push reforms at the state level, riders were added.

At present, in order to avail benefits, a thermal project has to have a generation capacity of over 1,000 Mw and a hydel project, more than 500 Mw. Also, power has to be sold in more than one state.

BIG DEAL

MEGA STAGUS to come easily for private firms

TORRENT, JINDAL power projects to benefit

PROJECTS GET 5% Customs, 16% CVD waiver on equipment imports