PERFORMANCE BUDGET 1998-99 - Ministry of Power

c) The foreign exchange rate variation paid to the company on account of the
protection given on return on equity as being a pass through.
d) The amount of grossed-up tax that is payable and actually paid on the tax paid by
the IPPs under item a, b & c above.
13.2.4 Standing Independent Group:
Recently there have been a number of proposals from various countries/organisations
for development of show-case power generation projects i.e. large capacity, low tariff
multi-state projects through direct negotiation with the developers/countries. If there
are specific economic advantages likely to accrue by making a departure from the
approved procedure of competitive bidding, such projects could be negotiated quickly
to enable the country to add capacity within the next few years, provided there is a
transparent mechanism that can be established for the purpose.
The Government of India has, therefore, constituted a Standing Independent Group
(SIG) under the Chairmanship of Justice P N Bhagwati with Shri M.K. Sambamoorthy,
Dr. P.K. Pachauri, Shri T.L. Sankar and Shri Deepak Parekh as members, to establish
modalities and parameters for negotiation of power projects proposed by foreign
agencies/ companies.
The Group has commenced its work and is now finalising the procedure and
methodology of establishing Showcase Power Projects. The group has selected three
sites- Pipavav on the Western Coast and Cuddalore & Krishnapatnam on the Eastern
Coast as possible locations for putting up Showcase Power Projects based on imported
coal.
13.2.5 Captive Power Policy:
Recently in January 1998, Ministry of Power has written to all the States to evolve a
meaningful captive generation policy on the lines of Kerala and Maharashtra and inform
Ministry of Power about the tangible results achieved in this direction. It has been
pointed out to the States that though a large number of IPPs have been accorded technoeconomic
clearance by CEA, they have failed to achieve financial closure due to the
lender’s concern of payment risks caused by the weak financial health of the SEBs to
whom the power has to be sold. In such a scenario, the States have been impressed
upon to promote captive and group captive power plants like Vijjeswaram in Andhra
Pradesh and Gujarat Industrial Power Corporation Limited(GIPCL) in Baroda, Gujarat,
where groups of existing and new industrial consumers have come together and jointly
set up and operate captive power projects for meeting their captive requirements, with
the supply to the grid being restricted to the minimum. As these captive power plants
can supply power to the grid during peak hours, the States have been requested to
consider adopting, inter alia, differential peak/off-peak tariffs with time-of-the-day
metering to facilitate utilization of this capacity to the maximum extent during the peak
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