Sops to boost power projects in MP sought

To promote power projects to overcome the shortage of electricity, the PHD Chamber of Commerce and Industry (PHDCCI) has asked the Madhya Pradesh government to offer a unique loan scheme.

The loan amount, according to the chamber, should be equivalent to sales tax, other state taxes, local and municipal levies, which may become due during the construction period for seven years from the date of commencement of operations for all power projects with capital outlay of up to Rs 1,500 crore.

The chamber has made this suggestion to be included in the new power policy, which is in the pipeline.

The moratorium period for such loans, the chamber said could be extended to 12 years and the period for repayment to 15 years. The loan could be repayable over 10 years after expiry of the moratorium period of seven years, it said.

The chamber said the government must set its targets like new capacity addition up to 5,000 Mw, improving the plant load factor up to 90 per cent in all the thermal plants, reduction of transmission losses to acceptable levels (from the existing 45-50 per cent), ensuring that the user pay principle was accepted at all levels, restoration of the fiscal health of the MP State Electricity Board and a stable tariff regime with round the clock power supply.

The chambers said the new policy must provide for attaining 100 per cent metering before June 10, 2005 as provided in the Electricity Act 2003. Meters should be installed at the sub-station level to check the difference between electricity supplied and billed, it added.

According to the chamber, the state transmission utility should be deemed to be the transmission licencee of the state and private transmission licensees may be encouraged to ensure that transmission capacity keeps pace with increase in generation.

The government should switch over to the "availability-based tariff" regime, which sho-uld be implemented on "intra-state" basis, the chamber said.

On allotment of space for power projects, the chamber said the land could be acquired by the government and transferred to the project at the acquisition rate. Exemption from stamp duty could be provided for registration of land for such projects, it said. "The land owned by the government may be provided on lease rental of Rs 100 per acre for 99 years," the chamber said.

The chamber has also floated an idea of "lease-renovate-operate-transfer" contracts for maintenance of existing power projects with private investors so as to share investment and utilise the operation and maintenance expertise of the private sector.

On the low plant-load factor (PLF), the PHDCCI said the plant engineers should shape up the units running below 70 per cent PLF or they should be handed over to the National Thermal Power Corporation.

The chamber pointed out that the existing captive power policy of the state did not allow sale of electricity to a third party and any surplus power had to be sold to the state electricity board.

These provisions could be re-examined in the light of the Electricity Act 2003, it said. The guiding factor should be to ensure maximum use of the installed generation capacity, the chamber added.

The Electricity Act has separated transmission and trading functions, with transmission licensees barred from trading.

To encourage efficient use and conservation of energy, the State Government should (in consultation with SERC) formulate a 'Demand Side Management Policy' including some tariff measures.

Fiscal incentives and disincentives must be introduced to encourage use of energy efficient equipment. Special courts as specified in the Electricity Act 2003 should be established to decide on power pilferage related offences.

Power roadmap

• The government must work for adding 5,000 Mw new capacity
• The plant load factor should be raised to 90 per cent in all the thermal plants
• The transmission losses should be reduced to acceptable levels from the existing 45-50 per cent