The Legal 500

Railways

Railway Projects through PPP

The Ministry of Railways, GOI, has identified certain areas of possible execution through PPP route. These include development of world class stations, establishment of super specialty hospitals/medical colleges, setting up of manufacturing units for rolling stock, dedicated freight corridor, rail axle factory, refrigerated container factory, high speed rail corridors, high speed port connectivity, diesel multiple unit factory, optic fire cables infrastructure and multi-model logistic parks. 

 

Certain recent and important legal developments in this area are set out below. 

Railways

Railway Projects through PPP

The Ministry of Railways, GOI, has identified certain areas of possible execution through PPP route. These include development of world class stations, establishment of super specialty hospitals/medical colleges, setting up of manufacturing units for rolling stock, dedicated freight corridor, rail axle factory, refrigerated container factory, high speed rail corridors, high speed port connectivity, diesel multiple unit factory, optic fire cables infrastructure and multi-model logistic parks. 

Shipping

Time Frame for No Objection Certificate

The Directorate General of Shipping, GOI, has reduced the time frame for the processing of No Objection Certificate (“NOC”) for registration of deep sea fishing vessels to a fortnight from the date of such application. Also, the validity period of the NOC issued has been increased to 1 year from the earlier six month validity period.  

 

Power

Central Electricity Regulatory Commission Issues New Trading Margin Regulations

Central Electricity Regulatory Commission (“CERC”) in exercise of its powers under the Electricity Act, 2003, has issued new regulations fixing the trading margin for inter-state trading in electricity. The main features of the regulations are as follows:

1.     Trading margins shall apply only to short term buy- short term sell contracts for the inter-state trading.

2.     Trading margin shall not exceed 4 paise per unit if the sell price of the electricity is less than or equal to INR 3 per unit. The ceiling of trading margin shall be 7 paise per unit in case the sell price of electricity exceeds INR 3 per unit.

3.     The ceiling on trading margin shall include the trading margins charged by all the traders put together in case more than one trading licensees are involved in a chain of transactions. 

 

CERC Notifies Power Market Regulations

CERC has notified the Power Market Regulations, 2010. These regulations shall govern the transactions in various contracts (i.e. inter-sate contracts, spot contracts, term ahead contracts, derivative and other related contracts) related to electricity.

These regulations mainly provide guidelines for the contracts, detailed capital structure and management structure for power exchange, and provisions for effective market monitoring and surveillance, prohibiting insider trading and protection of the whistle blowers.      

 

Special Economic Zones

Sections 20, 21 and 22 of the Special Economic Zone Act, 2005, Notified

The GOI has notified section 20, 21 and 22 of the Special Economic Zone (“SEZ”) Act, 2005, which shall come into force from the date of the notification i.e. January 13, 2010.

In addition, the GOI in exercise of powers conferred under sub-section (1) of section 21 of the SEZ Act, 2005, has specified the acts or omissions punishable under the Foreign Trade (Development and Regulation) Act, 1992, as notified offences for the purpose of SEZ Act, 2005 and under Sub-section (2) of section 21 authorizes the ‘Development Commissioner’ of the jurisdictional SEZ to be the ‘enforcement officer’ in respect of the notified offences committed in SEZ.

Automated Teller Machines and Banks permitted in SEZ not as Offshore Banking Units

The GOI has notified that the provisions of clause (u) of Section 2 of the SEZ Act, 2005 (Offshore Banking Units) shall not apply to SEZ in so far as they relate to setting up of offsite Automated Teller Machines (“ATM”) in SEZ and branches in SEZ by banks not licensed as Offshore Banking Units; with the prior permission of the Reserve Bank of India (“RBI”).

Developer to be Licensee as per Electricity Act, 2003

The GOI has notified that the developer of SEZ shall be deemed to be a licencee for the purpose of clause (b) of section 14 of the Electricity Act, 2003 with effect from the date of notification of such SEZ.

Hence, the developer of SEZ is deemed to be a licencee for the purpose of distribution of electricity after the notification of the said SEZ.

 

Environment & Climate Change

Clarification on Biological Resources

The Ministry of Environment and Forest (“MoEF”) had issued a notification dated October 26, 2009 listing 190 biological resources, which would be exempted from purview of the Biological Diversity Act, 2002 provided they are traded as commodities. This was in response to a long-standing request made by the Ministry of Commerce as well as from trade and industry. Subsequent to the issuance of the said notification, the MoEF has clarified that the notification dated October 26, 2009 only allows export of those 190 biological resources and such export would not require prior permission of National Biodiversity Authority (“NBA”). The MoEF has further, clarified that if those 190 biological resources are to be used for research or industrial purpose, the same would require obtaining of prior approval of the NBA as per the relevant provisions of National Biodiversity Act, 2005.

Consideration of Expansion Projects for Environmental Clearance in Thermal Power Sector

MoEF has decided that the proposals for expansion of projects in thermal power sector to which Environmental Clearance (“EC”) has been granted once, can be considered for environmental clearance for further expansion only if the implementation of earlier phase has commenced. In case environmental clearance for earlier phase is yet to be granted, the Project Proponent (“PP”) shall have to apply afresh and submit a comprehensive proposal for the entire project by clubbing all the phases so that the environmental issues can be addressed in entirety.

Time Limit for Validity of Terms of Reference

The Environment Impact Assessment Notification 2006 (“EIA 2006”) did not prescribe a time limit for which Terms of Reference (“TOR”) prescribed for undertaking detailed Environment Impact Assessment (“EIA”) studies shall be valid. MoEF vide its office memorandum bearing no. J-11013/41/2006-IA.II(I) dated March 22, 2010 has decided that from April 01, 2010, the prescribed TOR would be valid for a period of two years for submission of EIA / Environmental Management Plan (“EMP”) reports, after public consultation wherever required. The same may be extended for the third year on the basis of proper justification and subject to approval by Expert Appraisal Committee / State Expert Appraisal Committee, as the case may be.

However, the proposals which have already been granted TORs, the EIA/EMP reports should be submitted, after consultation, if required, within four years from the date of grant of TOR, with primary data not older than three years.  

EIA/EMP to be Prepared by Accredited Consultants

MoEF has decided that the final EIA/EMP by all the PP to whom TOR were awarded under EIA Notification, 2006 would be entertained only if the same is prepared by the Consultants accredited by National Accreditation Board of Education and Training/Quality Council of India (“NABET/QCI”). After July 01, 2010, MOEF would not entertain any final EIA/EMP from any PP prepared by non-accredited consultant. 

Further, MoEF has provided that a consultant would be confined to accredited sectors and parameters so as to bring more specificity in EIA document. QCI would maintain a full transparency on the procedure followed for accreditation, accredited consultants, and feedback and evaluation mechanism for accredited consultants.

The accredited consultants preparing the EIA/EMP reports would need to include a certificate in such report along with the data provided by other organization/s and the status of the approvals.

 

Guidelines for Expansion of Coal Mining Sector Projects

The expansion projects for coal sectors that have obtained EC under EIA Notification, 2006 may opt for exemption from public hearing under the said EIA Notification at the time they expand their production. The Expert Appraisal Committee (Thermal & Coal) would consider the following aspects before granting exemption from public hearing:  

a)     the expansion projects which has obtained the EC under EIA Notification 2006 at least once and has undergone public hearing at least once.

b)    Exemption may be granted once in five years for an expansion project under clause a) above.

c)     The expansion project with prior EC and which has undergone public hearing may be given exemption if:-

 

                      i.        There is no additional lease/area involved

 

                     ii.        There is no change in mining method

 

                    iii.        Increase in production is by better housekeeping/efficiency/better technologies

 

                    iv.        No additional manpower involved

 

                     v.        No additional equipment involved

 

                    vi.        No additional water requirement involved or additional water requirement is met by recycling or rain water harvesting

 

                   vii.        No additional road transport involved or dedicated conveyor cum rail mode of transport is involved

 

                  viii.        The environmental quality parameters are within the prescribed limits

 

                    ix.        No additional Resettlement and Rehabilitation is involved and earlier R&R has been completed

 

                     x.        Earlier EC compliances have been done without violations

 

                    xi.        The issues arose, if arose, in earlier public hearing have been complied with and

 

                   xii.        Involving underground mining method without involving additional surface rights.

 

Hazardous substances allowed to be conveyed from Coastal Regulation Zones

The amendment to a GOI notification of 1991 pertaining to Coastal Regulation Zone rules totally prohibited conveyance of hazardous substances from CRZ to industrial units. However, Supreme Court of India (“SC”) while interpreting the relevant provisions of the said amended notification on carrying of hazardous substances from ports to the industrial units, observed that the said amendment was not “happily worded”. In order to make the rule workable, the Hon’ble SC re-interpreted the vague phrases to enable industries to carry imported hazardous substances from ports (CRZ) to their factories.

Authors:
Sunil Seth (e-mail:sunil.seth@sethdua.com) is a Senior Partner and Amit Mehta (e-mail: amit.mehta@sethdua.com) is a Partner with Seth Dua & Associates, Solicitors & Advocates, India

www.sethdua.com