NEW DELHI, April 30: Various private players in the power sector who till recently thought that getting clearances for smaller projects costing less than Rs 1,000 crore would become simpler following the government's September 1996 notification would be best advised to think again. The notification, issued by the Ministry of Power to ensure that smaller projects get cleared without any delay to meet the yawning supply demands, made it clear that such projects would not require clearances from the Central Electricity Authority (CEA)- instead, the projects would be cleared by the respective state electricity boards (SEBs). However, as a host of independent power producers (IPPs) in states like Tamil Nadu and Andhra Pradesh still require clearances from the CEA. The notification (an amendment to an earlier notification dated December 1995) obviates CEA clearances under just one section of the Electricity Supply Act of 1948. Under another section of the Act, however, they still require CEA clearances. Interestingly, one of the IPPs which is in the fray for a project in Tamil Nadu has even approached the Ministry of Power and pointed out the anomaly and delay caused by the clause. While senior officials in the Ministry of Power agreed that the lacunae existed, they had no solution till the Tamil Nadu government write to the Ministry on the matter which would then be taken up for review! No assurance, naturally, could be given on whether the matter would be resolved or how long it could take. The September notification says that under Section 29 (1) of the Act, power projects with a cost of less than Rs 1,000 crore need not submit its plans to the CEA. The vetting process, as in several well-publicised cases of the so-called "fast-track" projects, had lead to huge delays. It was also pointed out that it meant unnecessary duplication as the SEB vetted such costs anyway. So far, so good. In addition, under 43(A) of the same Act, it is clearly specified that any proposed electricity tariff must conform to the two-part tariff laid down under the new power policy. Again, this in itself doesn't create too much of a problem. Except, the two-part tariff structure that the SEBs and their advisors - Crisil in the case of several SEBs - have recommended to the IPPs have not been approved by the CEA or the Ministry of Power. It's not as if the tariff suggested by the SEBs is a faulty either. The problem is that the earlier two-part tariff was based on the assumption that the power plants would operate at a capacity utilisation of a mere 68.5 per cent. It was on this that a maximum return of 16 per cent was to be calculated.
