Changes in mega power policy get Cabinet approval

The Cabinet Committee on Economic Affairs on Thursday approved two changes in the Mega Power Policy 2009 to benefit more developers.

To avail the benefits under the scheme, developers will be allowed to tie up 65 per cent of the installed capacity through competitive bidding and another 35 per cent through regulatory tariff. Earlier, developers were expected to tie up 85 per cent of their installed capacity.

This is a one-time dispensation for 15 projects which are located in the states such as Orissa, Madhya Pradesh and Chhattisgarh that have a mandatory host state power tie-up policy of power purchase agreements under regulated tariff.

"The maximum time period has been extended to 60 months instead of 36 months from the date of import for provisional mega projects (25 projects), for furnishing final mega certificates to tax authorities," said finance minister P Chidambaram after the meeting. The policy envisages fiscal concessions like zero custom duty for import of capital equipment for such projects, benefit to the domestic bidders and income tax benefits. In addition, the income tax holiday regime as per section 80-IA of the income tax Act 1961 can also be availed for taking up mega power projects.

So far, of the 172 Fuel Supply Agreements as many as 157 have been signed between power producers and Coal India Ltd, which would ensure availability of fuel to power plants to boost power generation in the coming years.

The Union Cabinet also approved a proposal for conversion of perpetual non-cumulative preference shares of three state-owned banks to equity Indian Bank UCO Bank and Vijaya Bank with shares amounting to Rs 400 crore, Rs 1823 crore and Rs 1,200 crore respectively. The first such exercise, this will help the lenders meet Basel III capital requirements

It also cleared a policy for land management by large ports that would allow these port authorities to lease out excess land.

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