Govt gives 25 mega power producers extra time for tax breaks
Extension of incentives to ink deals would increase power availability and ensure consumers do not have to pay more, says government statement
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New Delhi: The Union cabinet on Friday gave a five-year extension to 25 large power projects to ink long-term power purchase deals and avail the promised customs and excise duty benefits on equipment procured under the Mega Power Policy of 2009.
An official statement issued after the cabinet meeting chaired by Prime Minister Narendra Modi said that the extension of incentives to ink deals would increase power availability and ensure that consumers did not have to pay more.
The statement said projects will get tax breaks on a pro rata basis against the quantum of power purchase deals they sign with utilities.
The 25 projects were given provisional mega power project status in 2011 and had five years to sign power sale deals, which they failed to do. Now, they have another five years to do so.
Former power secretary Anil Razdan said supporting these projects is necessary in view of the expected power demand increase on account of the Make in India drive, rural electrification and the shift to electricity from fossil fuels for transportation and cooking.
The move will provide about Rs10,000 crore of benefits to the 25 projects with about 32,000 megawatts (MW) in capacity and help ease the stress some of them pose to the banking sector. Only 11,000 MW in capacity has been commissioned, with the remaining in various stages of implementation. The total cost of these projects is estimated to be about Rs1.5 trillion.
GMR Chhattisgarh Energy Ltd, Monnet Power Corp. Ltd, Lanco Power Ltd, Essar Power Jharkhand Ltd, Jindal India Thermal Power Ltd, Hinduja National Power Corp. Ltd, IL&FS Tamil Nadu Power Co. Ltd and Torrent Energy Ltd are among companies that are eligible for the benefits.
Further, in a bid to promote organic farming among farmers and augment their incomes, the cabinet approved unrestricted export of organic farm produce. It also enhanced the ceiling on export of organic pulses from 10,000 tonnes a year currently to 50,000 tonnes.
In a move to boost indigenous production of urea, the cabinet cleared an amendment to the New Urea Policy, 2015 which will enable companies to produce beyond the re-assessed capacity. The move is expected to boost local production of the plant nutrient, the statement said.
The cabinet also approved a new air services agreement between India and Serbia.
In another decision, it approved extension of grant-in-aid support to the network of 12 Agro Economic Research Centres and three agro economic research units for another year (2017-18).
Further, to eradicate child labour, the cabinet approved ratification of the Minimum Age Convention, 1973 and Worst Forms of Child Labour Convention, 1999 of the International Labour Organization (ILO).
The cabinet also cleared an understanding between the forum of state electricity regulators and the National Association of Regulatory Utility Commissioners on large-scale integration of clean energy into the electricity grid.