The Telegraph
Since 1st March, 1999
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Mega power projects in fast-forward mode

Calcutta, Feb. 28: The Union Budget 2003-04 has good news for the power sector. Keeping in mind the BJP government’s agenda to provide power to all by 2012, finance minister Jaswant Singh today announced the liberalisation of the mega power project policy.

The policy has been further liberalised by extending the benefits available to the notified 18 projects to any power project that fulfils the conditions prescribed for mega power projects. The 18 notified mega power projects enjoy various duty and licensing facilities.

Power industry officials said that on account of inadequate generation capacity, the country is plagued by power shortages. The total energy shortage during 2002 was nearly 38,000 million units and the peak shortage was 10,000 MW.

“It is a matter of great concern that the annual per capita consumption of power in India, at about 350 kilo watt hour is among the lowest in the world. The end users of electricity like households, farmers, commercial establishments, industries are confronted with frequent power cuts, both scheduled and unscheduled. Power cuts, erratic voltage and low or high supply frequency have added to the power woes of consumers,” they said.

Firdose Vandrevala, managing director, Tata Power Company welcomes the finance minsiter’s announcement of extending benefits under mega power project policy. “Reduction in import duty on transmission equipment from 25 per cent to five per cent is a progressive step to enhance growth in the sector,” he added.

Reduction in import duty on LNG terminals from 25 per cent to five percent will result in lowering fuel cost for a power plant, the Tata Power MD said.

The government’s announcement to liberalise mega power project policy will boost the generation capacity of the power sector. It will also see inflow of investments in this sector, said G. D. Gautama, chairman of West Bengal State Electricity Board.

There have been major slippages in meeting targets of capacity addition during VIII and IX five-year plans. Only 53.77 per cent of the capacity addition target was achieved during Plan VIII. During the Plan IX, too, only about half of the target was achieved.

In a bid to encourage private participation in power transmission, the budget has also proposed to reduce customs duty on specific equipment for high voltage transmission projects from 25 per cent to 5 per cent.

To encourage research in solar energy, wind turbine and hydrogen fuel, the government has allocated Rs 20 crore to the Council of Scientific and Industrial Research to launch incentive-driven research in these three fields.

Reacting to the government’s move to reduce customs duty on transmission equipment, senior officials of the power sector said that inadequate investments in transmission and distribution infrastructure have resulted in power evacuation constraints from the generating stations.

Power industry officials pointed out that out of the Rs 8,00,000 crore required for doubling the power capacity to 2 lakh MW by the year 2012, about Rs 2,00,000 would be required for the associated transmission system including the creation of a national grid.

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