The prospective developers, however, said there were several hurdles in implementing these projects. Apart from the number of clearances needed and the long drawn formalities required, there were serious constraints in financing these projects.

Following the Centre's announcement which allowed states to form their own policy on co-generation projects, Maharashtra announced the policy last year. However, the government has been amending the policy since then to make it more investor-friendly.

As per the recent amendments the government has given the promoters of co-generation projects an option to generate a maximum of 40 mw through conventional fuel.

Tripathisaid the state has offered several incentives to encourage such projects, these include a high rate of purchase of power from these projects.

The Maharshtra State Electricity Board (MSEB), he said, shall purchase power from several co-generation projects such as projects based on municipal solid waste, sewage, biomass and agro-waste at the rate of Rs 2.25 per unit.

For this the state has decided 1994-95 as the base year and from then on a five per cent escalation price will be provided, he said. This has also made financing of these projects attractive, he added. The five per cent escalation is available to the developer for the first 10 year of the project. For the next three years there will be no escalation and the rate will be kept flat and after that period for another several year as escalation of five per cent will restart, Tripathi added.

The projects based on the municipal waste will not only help in the disposal of the waste but also in reducing the pollution. For these projects municipalcorporations will supply the waste at the project site free of cost, he added.

All the co-generation projects are also entitled to bank energy with the MSEB. Banking of energy is allowed both peak and non-peak hours for a period of one year. MSEB will settled the energy account with the promoters at the end of the year as per the tariff applicable during the year. However, energy balance at the end of the year will not be considered for the next year, he added.

MSEB will also bear transmission losses for first three year. Thereafter these will be levelised at the rate of two per cent. Apart from these the state has will also assist the developers in availing themselves of several infrastructural facilities such as land, water and electricity supply.

These projects are also given protection against foreign exchange fluctuation to a limited extent. The state has allowed the third party sale of electricity to enable promoters to sell the electricity to any industrial or commercial consumer. However, thepromoters will have to give two per cent wheeling charges to the electricity board for the use of its transmission system. These projects are also entitled for some tax benefits, said PS Paunikar, Technical Director (Corporate Planning) MSEB.

For the investment in plant and machinery, new building, land development, technical and design development the promoters will be entitled to get sales tax rebate upto 50 per cent. This will be given in six equal installments over a period of six years.

Besides, octroi paid for bringing machinery for the projects will also be refunded to the promoters by municipal corporation.