12,000mw Cap For Liquid Fuel Projects Lifted

The government has removed the 12,000 mw ceiling for liquid fuel power projects and has put condensate and orimulsion for power generation on the Open General Licence (OGL) list.

Under the new liquid fuel policy announced by the government yesterday, the cieling of 12,000 mw has been limited to naphtha while promoters using any other fuel can set up projects by importing fuels beyond 12,000 mw without having any linkage from the union government.

The government has also extended the deadline for financial closure for liquid fuel project to 31st October, 1998 from 31st March, 1998.

Under the earlier liquid fuel policy the government had set a cieling of 12,000 mw of liquid fuel projects to be set up in the country, whereby IPPs had to have a linkage from the centre for setting up liquid fuel projects.

The government under the new policy has allowed the states to re-allocate the existing fuel linkages. Under this the states can give the existing linkages to new promoters if they feel that the existing promoters are not capable to executing the project.

The government has specified that the state government which intends changing promoters will have to inform the ministry of power within a month. The ministry of power will thereafter recommend the same to ministry of petroleum and natural gas for the approval.

The government has fixed a six month time frame for states to identify its new developers through competitive bidding

The government under the new liquid fuel policy has allowed states to contract for new power projects based on furnace oil beyond the existing linkages. The government has however attached a condition for these projects whereby the promoters are required to use integrated gasification combined cycle technology (IGCC) which will restrict the sulphur emissions from the project. The direct impact this will be reflected in the increase the unit cost of such projects by around 30-50 per cent.

Apart from this the government has also allowed limited use of diesel for power generation. Permission to use diesel will be granted to promoters setting up power projects in inaccessible and isolated areas, whereby other fuels cannot be transported.