Govt May Ease Norms For Cea Clearance

The Union government may exempt power projects with costs up to Rs 4,000 crore (or an installed capacity of 1,000 mw) from techno-economic clearance of the Central Electricity Authority (CEA). Official sources said a proposal to this effect had been put forward by the power ministry.

At present, projects with costs up to Rs 1,000 crore (or 250 mw capacity) do not require the techno-economic clearance.

Under the current laws, the ceiling for techno-economic clearance has to be specified in monetary terms rather than in terms of installed capacity. So the government will have to set the new limit in terms of investment required rather than in terms of installed capacity.

 

If the capacity limit for techno-economic clearance is to be raised to 1,000 mw, the government will have to raise the cost limit to around Rs 4,000 crore.

The move to raise the ceiling for techno-economic clearance comes as part of a uniform criteria for competitively bid projects which require to be cleared by CEA.

Official sources said the Centre was considering the option to expedite the clearance process and to empower the state governments to give the required technical clearances.

The government has already announced that investments below Rs 1,500 crore will not require any clearance from the Foreign Investment Promotion Board (FIPB). This also exempts projects with a capacity below 1,200 mw from FIPB clearance for bringing in foreign equity.

The Union power ministry, along with the CEA, is in the process of working out a uniform criteria for evaluating competitively bid projects.

The CEA evaluates and issues TEC on the basis of the projects capital cost. Some promoters have objected to the manner in which CEA benchmarks the capital costs of projects and issues clearances.

Official sources pointed that in the context of declining equipment prices in the global market, it might not be relevant to work out a benchmark for capital costs of projects.

They pointed out that the benchmark that have been worked out on the basis of 1994 prices would not be relevant under the present context.

It is in this regard that the new techno-economic evaluation criteria will look into the relevance of capital costs of projects and would also go into its definition as laid down in the Electricity (Supply) Act after which the fresh guidelines for evaluating competitively bid projects would be laid down.