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Projects, Energy and Natural Resources
Certain important legal developments in this area are set out below.
INFRASTRUCTURE
SPECIAL ECONOMIC ZONE
Guidelines for Power Generation, Transmission and Distribution in Special Economic Zones
Projects, Energy & Natural Resources
Certain important legal developments in this area are set out below.
INFRASTRUCTURE
SPECIAL ECONOMIC ZONE
Guidelines for Power Generation, Transmission and Distribution in Special Economic Zones
Ministry of Commerce and Industry, Government of India ("GOI") has issued guidelines dated March 21, 2012, for power generation, transmission and distribution in Special Economic Zones ("SEZ") and the said guidelines provide inter alia as follows:
Generation of Power: A power plant can be set up by developers and co-developers in a SEZ, as part of the infrastructure facility in the processing area or non-processing area of the SEZ. Such a power plant setup in the processing area will be entitled to all benefits available to developers and co-developers, including fiscal benefits under Section 26 of the SEZ Act, 2005, including benefits for initial setting up, duty free imports of raw materials, components and consumables for operation and maintenance of power plant and generation of power and there will be no obligation to achieve positive Net Foreign Exchange Earning for such power plants.
Transfer of Surplus: The developer, co-developer, or SEZ unit, as the case may be, can transfer the surplus of the power generated in their power generating plants, whether stand alone or captive plants, in excess of the requirement of the SEZ, to a Domestic Tariff Area ("DTA"). However, such a developer, co-developer, or SEZ unit power plant shall have to make an application for sale of surplus power to DTA to the development commissioner and will have to pay duty as applicable on import of such power.
Distribution of Power: Distribution of power is a licensed activity except as otherwise specified in Section 14 of the Electricity Act, 2003 and the developer of a SEZ shall be deemed to be a licensee for the purpose of clause (b) of Section 14 of the Electricity Act, 2003 to distribute electricity as a distribution licensee.
Supply of Power: In respect of power supplied from a processing area to constituents in non-processing area or from processing area or non processing area to DTA, it should be at such a price as agreed to between the relevant regulator and the power supplier (i.e. developer/co-developer/unit). Such power plants would ensure maintenance of a separate meter for supply of power from processing area to constituents in non-processing area or from processing area / non-processing area to DTA and details of power so supplied should be submitted to the Development Commissioner on quarterly basis.
Authors: Sunil Seth (sunil.seth@sethdua.com) is a senior partner and Amit Mehta (amit.mehta@sethdua.com) is a partner with Seth Dua & Associates, Solicitors & Advocates, India