MUMBAI, SEPT 27: Ignoring the embarrassment over controversial Enron power project, the Sena-BJP government today unfolded its new policy to promote private sector participation in development of captive and non-captive power generation through small hydro electric projects.Talking to The Indian Express, Irrigation Minister Eknath Khadse said: ``The cabinet had taken a decision on private sector participation in small hydro electric projects of up to three MW. However, we were unable to unfold the details owing to code of conduct in force. Now, comprehensive rules have been framed.'' Initially, the government plans to implement 10 projects and depending on response, permission for additional projects would be considered.Khadse said as per the policy declared by the Centre, no tenders will be floated for captive power generation plants up to three MW. ``We will not be required to float tenders for such projects. We can sign MoUs as has been proposed by the Centre,'' he said. The IrrigationMinister said all the proposals will be placed before a high level committee for private sector participation headed by the Chief Secretary.Elaborating on the new policy, Khadse said the promoter will have to obtain permission from the MSEB for generation of power as required under the provisions of the Electricity (Supply) Act, 148. The MSEB will purchase power at the rate of Rs 2.25 per unit considering 1999-2000 as the base year and this rate will be increased at five per cent per year for first ten years after commissioning of the project. Thereafter, the rate will remain constant for five years and will again increase at the rate of five per cent per year for next 10 years. After 25 years, the rate per unit will be 10 per cent less than the MSEB's average realisation rate for the preceding year. MSEB will purchase balance power generated from such captive units at any time during 24 hours.On the concessions for the promoters, Khadse said if the capital investment involved foreign exchange and theproject loan also involved foreign exchange, protection against exchange rate variation will be given to some extent. The exact formula will be decided by the MSEB while signing the power purchase agreement.While the concessions in excise duty and turnover tax will be decided by the finance department, these projects will enjoy complete exemption from payment of octroi and entry tax.Investment made against machinery, new building, land development and technical developments for these projects will be treated as capital investment for the project and will only be treated eligible for sales tax concessions.Khadse also said clearance from the Ministry of Environment and Forest will not be required for these projects since while getting permission for the irrigation projects - on which the projects will be set up - no objection certificates have already been obtained.
