The power ministry will soon seek approval of the Cabinet for providing a level playing field for the private sector in expediting the investments in the hydro sector.
The ministry proposes to offer an exemption from competitive tariff bidding till January 2011, to the private sector as enjoyed by the public sector undertakings (PSUs) under the National Tariff Policy, 2006. The move is crucial when the Centre is pursuing its ambitious plan to add 50,000 mw in the hydro sector.
According to power ministry sources, ?The exemption will be offered to the private sector for hydroelectric projects. This dispensation, which is currently applicable only to PSUs, would be available to private sector hydro projects, which obtain Central Electricity Authority (CEA) concurrence, sign power purchase agreements (PPAs) with distribution licensees and achieve financial closure before January, 2011.?
?In order to get the benefits under this policy, the project developers must follow an agreed time line with specific milestones such as–preparing detailed project reports (DPRs) within 2 years, concurrence by CEA/ states and all clearances within 3 years, financial closure and award of work within 3-1/2 years and completion of project within 4 years thereafter. All these steps except completion of the project should be completed before January, 2011. ? According to sources, large storage projects and run-of-the-river projects of capacity above 500 mw could be given suitable increase with respect to construction time. The time schedule will be determined by the appropriate regulator and must be obtained before commencement of the construction. Independent third party verification would be done regarding adherence to the agreed timelines.
Sources said that the Cabinet approval would ensure that the project allocation rights rest with the state government. Besides, this will also ensure that the scrutiny is undertaken by the power regulator and the CEA. These two coupled would lead to risk mitigation and facilitate expeditious development of hydro projects through assistance of the private sector.