The Legal 500

Power

New Regulations for Load Dispatch Centers

Central Electricity Regulatory Commission (“CERC”) has notified the final regulations for the fee and charges to be levied by the National and Regional Load Dispatch Centers under the provisions of the Indian Electricity Act, 2003. Ensuring financial autonomy is the main objective of these regulations so that they can discharge their statutory functions in an independent and non-discriminatory manner.

 

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

 

Power

 

 

New Regulations for Load Dispatch Centers

 

 

Central Electricity Regulatory Commission (“CERC”) has notified the final regulations for the fee and charges to be levied by the National and Regional Load Dispatch Centers under the provisions of the Indian Electricity Act, 2003. Ensuring financial autonomy is the main objective of these regulations so that they can discharge their statutory functions in an independent and non-discriminatory manner.

 

 

Following are the key features of the new regulations:

 

 a)     A dedicated development fund to ensure servicing of capital costs and equity contribution for expansion;

 

b)    Adequate provision for compensation to skilled manpower needs;

 

c)     Special depreciation rate for information technology equipments;

 

d)    16 per cent return on equity;

 

e)     Separate fee structure for system operation charges and market operation charges;

 

f)     New capital expenditure for modernization of equipment with the approval of the CERC.

 

Revised Mega Power Policy

 

 

GOI has approved modification in the mega power policy to encourage setting up of mega power plants. The modified mega power policy is as follows:

 

 i)      The power projects with the following threshold capacity shall be eligible for the benefit of mega power policy:

 

a)     A thermal power plant of 1000 MW capacity or more; or

 

b)    A thermal power plant of 700 MW capacity  or more located in the States of Jammu & Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or

 

c)     A hydel power plant of 500 MW capacity or more; or

 

d)    A hydel power plant of 350 MW capacity or more, located in the States of Jammu & Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura;

 

e)     GOI has decided to extend mega policy benefits to brownfield (expansion) projects also.

 

ii)      Mandatory condition of Inter-State sale of power for getting mega power status has been removed.

 

iii)    Goods required for setting up a mega power project, would qualify for the fiscal benefits after it is certified by an officer not below the rank of a Joint Secretary to the GOI in the Ministry of Power.

 

iv)    Mega power projects would be required to tie up power supply to the distribution companies/utilities through long term power purchase agreement(s) in accordance with the National Electricity Policy 2005 and Tariff Policy 2006, as amended from time to time by GOI.

 

v)     There shall be no further requirement of International Competitive Bidding (“ICB”) for procurement of equipment for mega projects if the requisite quantum of power has been tied up or the project has been awarded through tariff based competitive bidding, as the requirements of ICB for the purpose of availing deemed export benefits under Chapter 8 of the Foreign Trade Policy would be presumed to have been satisfied. In all other cases, ICB for equipments shall be mandatory.

 

vi)    The present dispensation of 15 per cent price preference available to the domestic bidders in case of cost plus projects of Public Sector Undertakings (“PSUs”) would continue. However, the price preference will not apply to tariff based competitively bid project/s of PSUs.

 

Shipping

 

 

Port Projects worth INR 77 Billion gets PPP Clearance

 

 The GOI has approved three port projects worth over INR 77 billion to be developed through PPP mode. The project cleared by the PPP approval committee include development of the fourth container terminal at Jawaharlal Nehru Port, Navi Mumbai, the largest container terminal to be considered for construction in the country. The other projects are a standalone container handling facility with quay length of 330 meters and the mechanization of coal handling facilities and upgrade of general cargo berth in the outer harbor of the Visakhapatnam port.

 

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

www.sethdua.com