States resist riders to UMPP sops

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Mumbai, Apr 26: The much-hyped ultra-mega power projects (UMPP) could be the first casualty with the Union power ministry and states headed on a collision course. The ministry has said that concessions—including customs duty exemption and income-tax holiday—under the mega power policy would be available only to states that make a commitment to privatise distribution.

The policy states: “The beneficiary states should… privatise distribution in cities having a population of more than one million.”

However, Tamil Nadu, Andhra Pradesh, Jharkhand and Maharashtra, where UMPPs of 4,000 mw each are to be developed, have vehemently opposed the power ministry's move on the ground that withdrawal of concessions would lead to an increase in tariff by up to 30 paise and also require revision in the payment security mechanism. This would impede investment by the private sector.

Interestingly, Karnataka, where a UMPP is proposed in the coastal region, has not objected to the power ministry’s diktat. Power ministry sources told FE that upcoming projects in states that fail to make a commitment to privatise distribution would no longer qualify as UMPPs. In such a situation, private developers may back out.

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