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Standalone power plants dedicated to exports can now qualify as special economic zones (SEZs) and be eligible for all tax sops as the Board of Approval for SEZs has approved a Department of Commerce proposal to amend existing rules which disallow it.
The amendment of the existing power guidelines is likely to benefit Adani Power Ltd, among other companies, as it may now be able to get SEZ status for its power plant coming up in Jharkhand. Its proposal was rejected by the BoA in February 2018 on the ground that it was inconsistent with the power guidelines.
“The Board was informed that the Commerce & Industry Minister had directed that the matter (of amending guidelines) may be deliberated in the BoA. The Board, after deliberations, approved the proposal,” the minutes of the meeting on January 9 said.
The paragraph in the present power guidelines disallowing stand-alone power plants will now be replaced with a paragraph stating that plants exclusively meant for export of power will be permitted and can be operated as a unit subject to all obligations and benefits available to SEZ units.
The Adani Group had reportedly signed a long-term power purchase agreement with Bangladesh in November 2017 for supplying power from its plant in Jharkhand
The BoA, headed by the Commerce Secretary, and including senior officials from all key Ministries and Departments including Finance, Revenue and Home, is the apex policy making body on SEZs.
The Department of Revenue, in its comments, had stated that the matter was purely a policy one and the Department of Commerce may take appropriate action.
It added that the Department of Revenue was only concerned with the policy of charging duty when power generated in an SEZ is supplied to DTA. The new power guidelines will be an enabler to allow power plant for export purposes as envisaged in the new guidelines issued by the Ministry of Power, according to the Commerce Department. “Further there will be no option of selling excess power in the DTA as the entire power has to be exported or consumed within the SEZ,” it said in its submission to the BoA.
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