New CPPs may not get IPR sops

Energy dept seeks withdrawal of electricity duty exemption

To discourage upcoming industries to set up captive power plants (CPPs) to cater to their power consumption needs, the state energy department has sought withdrawal of electricity duty exemption for CPPs.

The energy department has urged the industries department to take steps to repeal Section 20.2 of IPR-2007 and withdraw paragraph 20.2 of IPR-2007. The Chief Secretary has already given in-principle approval on the need for amending the IPR framework governing CPPs.

According to IPR-2007, new industrial units setting up CPPs shall be exempted from the payment of 50 per cent of electricity duty for a period of five years for self-consumption from the date of commissioning.

 

“As per the existing IPR, the CPPs not only utilise power for their captive consumption within the state but also export power for captive consumption of their units outside the state in which the state is losing electricity duty as well as cross subsidy for that quantity of power. The industries also put up CPPs with capacities in excess of their captive requirement and use the power generated for merchant trading,” G Mathivathanan, energy secretary stated in a letter to Parag Gupta, industries secretary.

The energy department has raised the demand for waiver of electricity duty exemption on the basis of recommendations made by the Sanjiv Hota committee, an expert panel constituted by the finance department to suggest revenue enhancement measures.

The expert committee had envisaged that by 2014-15, the projected availability of power will be at 5,983 MW from all sources as against the projected demand of 4,746 MW, resulting in sizeable surplus.

In view of the surplus power situation expected from 2014, the committee suggested that CPPs need not be encouraged as they cause loss of electricity duty to the state as well as loss of cross subsidy which would be otherwise available for the targeted consumer groups such as low tension (LT) domestic and agriculture.

Besides, the committee constituted under the chairmanship of finance secretary on comprehensive policy recommendations covering coal mining, coal washery and washery reject based power plants, has also recommended removal of electricity duty exemption for CPPs through an amendment in IPR-2007.

By 2013-14, Odisha is set to get 1,755 MW additional power as state share from six coal-based independent power producers (IPPs) that are expected to go on stream by then and from expansion projects of Central PSU - National Thermal Power Corporation (NTPC).

The six IPPs that are scheduled to commission their coal-fired power plants by 2013 include Maa Durga Power Company Ltd, GMR Kamalanga Energy Ltd, Ind-Barath Energy (Utkal) Ltd, Jindal India Thermal Power Ltd, Monnet Power Company Ltd and Lanco Babandh Power Ltd with a total envisaged capacity of 7,050 MW.

The state’s share from these power stations is pegged at 1,200.5 MW of which the net availability will be 939 MW.