Vedanta Group firm seeks rule relaxation for SEZ

Vedanta Group firm Sterlite Energy has sought relaxation in SEZ rules to benefit its power plant in Orissa which needs to transport coal through Vedanta Aluminum's special economic zone, a commerce ministry official has said.

Under the commerce ministry rules, all activities within a special economic zone must be directly related to its operations.

The group firm Sterlite Energy has set up a 2400 MW power plant adjacent to Vedanta Aluminum's SEZ.

While the SEZ needs to meet its energy requirement from the Sterlite power plant, the latter requires 1.7 million tonnes of coal a year. The movement of coal from the mines to the power plant can take place through a rail link which must pass through the non-processing area of the aluminum SEZ, he said.

The contiguity rules do not allow such a rail passage.

"The SEZ developer has sought relaxation in the norms and the government is likely to take a decision later this week." he said.

In a representation to the commerce ministry, the administrative ministry for the SEZs, the Vedanta firm has given an assurance that it will not take any tax benefits under SEZ Rules for the rail passage area.

A captive power plant was approved in the SEZ, but it could not "materialise" due to paucity of space.

To buttress its request for relaxation in the rules, the firm said power scarcity in Orissa makes it difficult to get uninterrupted supply so Sterlite Energy put up the plant to cater to the SEZ need.