Tax Incentives For Two Hydel Projects

Maharashtra irrigation secretary M D Pendse announced tax concessions for two hydro power based projects in the state at the global investors conference yesterday. These are the 400 mw Chikhaldara pump storaged project and the 600 mw Malshej Ghat project.

The measures include income tax holiday, excise duty benefits, concessional customs duties and new industry initiatives. The PPA will be valid for 25 years and the tariff will have a dollar as well as a rupee component. Under the PPA tariff escalation is also permitted and the exchange rate fluctuations can also be factored into the tariff. Discounting for levelised tariff is also allowed.

 

The tenders for both these pump storage schemes were floated earlier this month and are expected to be opened by April, 1997.

The other salient features of the PPA are that there is a state guarantee on payment default by MSEB, and no third party sale or captive use is permitted. The PPA also has a provision for penalised tariff in case of additional consumption. The PPA includes provision for arbitration.

The state has also offered five bagasse based projects for private participation. These are Krishna SSK and Kisan Veer SSK at Satara, Rajaram Bapu Patil SSK at Sangli, Bhima SSK at Pune, and Datta SSK at Kolhapur. Bagasse is obtained by the crushing of sugarcane.

These projects range between 12 and 25 mw. R M Premkumar, secretary, Cooperation and Textlies Department, said the projects are offered on a BOOT basis. The crushing capacity of the host factory has to be 5000 tonnes per day. It would lease out four acres at a nominal rent and provide water to the developer. Additional land and water will have to be procured by the developer.

The entire bagasse from the sugarcane plant will be provided to the project. Power will also have to be exported to the grid for at least 160 days a year.

Approval for such projects above 10 mw will have to be obtained from the state government.

Besides, a no objection certificate from Maharashtra State Electricity Board (MSEB) is also required. Other clearances that have to be obtained include those from the pollution control board, environment and approval of interfacing scheme from MSEB.