New Delhi: If a proposal by the commerce ministry goes through, special economic zones (SEZs) with captive power plants will no longer require a licence from state governments to distribute power within the tax-free enclaves. They will also not require a licence to access power from areas outside the SEZ.
“We are at a very advanced stage of discussion with the power ministry. The proposal needs amendment to the section 14 of the Electricity Act, which is expected to happen when the next session of Parliament is convened,” D.K. Mittal, additional secretary in the department of commerce, told a conference on SEZs organized by the ‘India Infrastructure’ magazine.
Supply norms: At present, the licence for the distribution of power from an SEZ has to be obtained from the state electricity board. Hemant Padalkar / HT
At present, while a power generating firm may establish, operate and maintain a generating station within an SEZ without obtaining a licence, distribution of power is a licensed activity, which has to be obtained from the state electricity board.
Kuljit Singh, a partner at accounting firm Ernst and Young, said that if the amendment comes through, there will be no regulatory oversight and project developers will be free to charge their own tariff. “While it is a procedural thing, it may help in setting up more power projects,” he added.
However, Pankaj Modi, head, SEZ and planning, Mundra Port and Special Economic Zone Ltd, was more cautious. “We need to wait and watch how the act is amended,” he said.
Utpal Bhaskar contributed to this story.