New Delhi, Jan. 2: The Cabinet Committee on Economic Affairs today approved changes in the norms governing big power projects to offer relief to more developers.
Under the Mega Power Policy, fiscal benefits in the form of zero duty imports and income tax waiver are extended to certified projects.
“To get the benefits under the policy, the developer must tie up at least 65 per cent of the installed capacity through competitive bidding,” finance minister P. Chidambaram told reporters after announcing that the CCEA had cleared the power ministry’s proposal of changes to the Mega Power Policy.
The remaining 35 per cent of the capacity should be distributed under the regulated tariff according to the host state’s policy, he said.
The amendment will bring relief to producers as they have to currently tie up 85 per cent of the installed capacity through competitive bidding with state distribution companies before they can take the benefits of the scheme.
According to the policy, thermal power projects of 1,000 MW and above capacity and hydro power projects of 500 MW and above are allowed duty-free equipment imports.
These benefits are only available after the submission of a provisional mega power project status certificate along with a fixed deposit receipt from any scheduled bank as a security for 36 months.
“The maximum time period has been extended now to 60 months instead of the current provision of 36 months from the date of import for furnishing final mega certificates to the tax authorities,” Chidambaram added.
The power ministry had proposed a relaxation in norms for 25 big projects that are being implemented at a cost of Rs 1.61 lakh crore by several companies, including NTPC, Jindal Power, Reliance Power and Lanco Infratech, to help them get the benefits under the mega power policy.
The implementation of the proposal will benefit the last lot of mega power plants with total 32,330 MW capacity.
The government had in July levied a 5 per cent custom duty, a 12 per cent countervailing duty and a 4 per cent special additional duty on import of equipment for all power projects. This is the second amendment to the policy, which was launched in 1995 to incentivise companies for setting up large power projects.
The cabinet has approved the conversion of preferential shares held by the government in Indian Bank, Uco Bank and Vijaya Bank into equity shares.
The government holds Rs 400-crore preference shares in Indian Bank; Rs 1,823 crore in Uco; and Rs 1,200 crore in Vijaya.
Following the conversion, the government’s holding in Indian Bank will go up to 82.22 per cent from the existing 80 per cent. In Uco, it will be 77.25 per cent (69.26 per cent), while in Vijaya Bank it will be 71.85 per cent (55.02 per cent).
The CCEA hiked the minimum support price (MSP) of jute by Rs 100 to Rs 2,400 per quintal for the 2014-15 season.
“Jute MSP of TD-5 variety has been increased by Rs 100 per quintal,” Chidambaram said.
To incentivise farmers for the production of higher grades, the premiums for TD-3 and TD-4 varieties of raw jute will be maintained at 20 per cent and 8 per cent, respectively, in relation to the price of TD-5, an official statement said. MSP for jute stood at Rs 2,300 per quintal last season.
Land use by ports
The cabinet has also approved policy guidelines for land management by major ports.
Chidambaram said these guidelines were aimed at optimum utilisation and realisation of the value of land reserves by linking them with prevailing market rates. They seek to minimise the powers of port authorities in the process of allotment.
The policy will be made applicable to all the major port trusts and Ennore Port Limited, except for land in the township areas of Kandla, Mumbai and Calcutta Ports.
• Amendments to Mega Power Policy approved
• Conversion of preferential shares held by the govt in Indian Bank, Uco and Vijaya Bank into equity shares approved
• Minimum support price of jute raised by Rs 100
• Policy norms approved for land management by major ports