• PAGE ONE
• INDEX
• HOME

Ministry studying hydel fund mop-up options

Our Bureau

NEW DELHI, March 22

THE Power Ministry is debating on the route to be adopted to mobilise resources for the Hydro Development Fund -- whether to take the legislation route or go through the Central Electricity Regulatory Commission (CERC).

The Ministry is considering a move to levy a cess of five paise on every unit of power sold by the Central sector generating units such as National Thermal Power Corporation and National Hydroelectric Power Corporation.

The funds so generated would accrue to the Hydro Development Fund and will be utilised to finance hydel projects and associated activities such as pre-construction works, including access bridges, etc.

Under the regulatory route, the Ministry is mulling the possibility of taking umbrage under the CERC's recent order which allows for a cess to be collected for the development of hydel projects. As per this scheme, the Government would need to take the r egulator's nod on project-specific expenditure.

The regulator has implied through its order that there will not be sufficient flow of private capital into the hydel sector owing to the high risks posed by the purchasing State electricity boards and the need for a deeper debt market to finance long ges tation hydel projects.

Hence, the Government intervention is required to add hydel capacity and hence optimise capacity addition through entry of efficient capital into the power sector.

Here, once the regulator approves the application for introduction of a cess on power sold by the Central sector power undertakings, the Government can operationalise the cess collection by issuing a notification.

The other option would require the Power Ministry to take a Cabinet nod to introduce a legislation before Parliament. In this case, the Government has the flexibility to have the cess levied on the entire power generated in the country -- Central, State and the private sectors -- and thereby generate more revenue for the hydel sector.

The Government had sometime last year attempted to approach the Cabinet with a similar proposal with the additional feature that 60 per cent of the cess funds would be returned to the States for deployment in the State hydel sector. It, however, failed t o take off owing to the then impending Assembly elections.

The proposal had sought utilisation of the funds by the Centre to finance expenditure on survey, investigation and preparation of detailed project reports of hydro projects; finance the expenditure on renovation and modernisation of power plants; and fin ance expenditure on transmission systems to evacuate hydel power.

The funds accruing to the States would be shared on the basis of share of hydel power potential as well as the consumption of electricity.

The Government had estimated that a five paise per unit cess on the entire power generated in the country would generate a resource of around Rs 2,800 crore in 2001-2002.