660 mw plants face denial

KG Narendranath, Noor Mohammad
Financial Express
Tuesday, Jan 05, 2010
New Delhi: The government would take a stricter stand against high-emitting sub-critical thermal power stations. The power ministry and the Planning Commission are mulling a new policy regime that would discourage new proposals for sub-critical stations by denying them fuel linkages. “Sub-critical stations would be deprived of all forms of policy support,” a senior functionary in the Commission told FE.

In the new regime, even if a firm planning a sub-critical plant opted to have captive coal mine in the absence of coal linkage, it would have to face an unfriendly government machinery. “Environmental clearance would not be forthcoming for plant sizes below 660 mw, the threshold for the carbon-efficient super-critical technology,” said the source.

The idea is to augment the availability of super-critical equipment in the domestic market at affordable rates and thereby encourage the setting up of more high-capacity thermal stations that can help manage the carbon intensity of India’s GDP.

The extant policy also prefers super-critical plants that consume 3% less coal, but many equipment-makers, including public sector Bhel, refuse to abandon the sub-critical technology they are conversant with.

The new policy would have serious implications for Bhel. While the PSU enjoys a near-monopoly in the domestic sub-critical power equipment market, it will have to face tough competition from private players like L&T, JSW, Bharat Forge and GE in the area of supercritical plants.

The government’s target is that 60% of fresh thermal capacities in the 12th Five-Year Plan and 100% in the 13th Plan would be of supercritical technology. However, the policy managers are worried that the interest of many equipment-makers in sub-critical plants has not waned. They reckon that unless all policy supports for such plants are withdrawn, it would be difficult to meet the Plan targets. Also, it is felt that a major expansion of the domestic manufacturing base for super-critical technology is imperative for reducing prices.

According to the current policy, plants of 1,000 mw and above get fiscal sops like import duty waiver and income tax relief. That apart, it is mandatory for any equipment supplier bidding in the bulk tenders of public sector NTPC and Damodar Valley Corporation to have a domestic manufacturing base for super-critical equipment. Super-critical power plants are also entitled to carbon credits in India.