The Union Cabinet yesterday approved a new policy for mega power projects and a proposal to amend the Land Acquisition Act.
The policy for mega power projects, which is formulated as a scheme, was formulated on the basis of the Bhagwati Committee recommendations. It includes setting up a power trading corporation, exempting equipment imports from customs duty and easing administrative controls like those relating to environmental clearances. A government spokesperson said the details would be revealed later.
A Bhagwati Committee is working out the parameters for negotiating mega power projects, the spokesperson said.
The proposed power trading corporation will be set up with equity contribution from Powergrid Corporation, National Thermal Power Corporation, National Hydroelectric Power Corporation and development financial institutions.
It will buy power from the mega projects and sell it to the PowerGrid and state electricity boards.
The new scheme envisages creating up to about 20,000-mw capacity through large projects. Thermal power projects of 1000-mw and hydroelectric projects of 500-mw would be promoted in the Ninth Plan.
Domestic purchases of machinery and equipment will be termed as deemed exports and will get a 15 per cent price preference.
Union power minister Rangarajan Kumarmangalam said the scheme is expected to attract foreign investments, both in debt and equity, amounting to $15-20 billion.
The minister said the scheme would make it possible for promoters of mega projects to produce and sell power at reasonable rates by taking advantages of economics of scale.
The policy proposal had been hanging fire for over two months with both the power and finance ministry trying to work out a package to assure timely payments to promoters.
Selected projects with all the necessary government clearances would be offered on competitive tariff bidding route to national and international power players.
The minister said tariffs would be finalised by the newly established Central Electricity Regulatory Commission.
Central power utilities would be assured 16 per cent post-tax return for mega power projects against the present cost plus approach, which PSUs have often described as discriminatory.
The cabinet also announced a separation scheme for 12 sick public sector undertakings. Under the scheme, the government will bear the burden of Rs 517 crore for retiring 11,700 workers under the voluntary retirement scheme.
"The presence of these workers was coming in the way of selling off the units. Now it will be possible to sell the units," a government spokesperson said. The PSUs being covered under the separation scheme are: Cycle Corporation of India, National Bicycle Corporation, Mining and Allied Machinery Corporation, Weighbird India, Tannery and Footwear Corporation, Rehabilitation Industries Corporation, National Instruments and Bharat Ophtalmic glass.
The VRS, offering an improved package of upto five years of wages for workers, was aimed at taking the liabilities of company before putting on the block, an official spokesman said.
The proposed amendment to the Land Acquisition Act envisages giving increased compensation to land owners and aims at speeding up the process of acquisition.
The Cabinet also cleared an industry ministry proposal to modernise the Indian Patent Office at a cost of Rs 75 crore. At present, the office receives about 20,000 applications a year and it took three years to scrutinise them, he said.
