State likely to withdraw exemption to CPPs, amend IPR

Bhubaneswar: Optimistic of emerging as a power surplus state after 2014, the state government is contemplating withdrawal of certain exemption availed by Captive Power Plants by amending provisions of the Industrial Policy Resolution (IPR)-2007. "It is requested that industries department may take steps to repeal section 20.2 of the IPR-2007 and withdraw paragraph 20.2 under "Power". Industries department may take suitable action for amendment of IPR, 2007," the energy department said in a letter to industries department on Wednesday.

According to section 20.2 of the IPR-2007, a new industrial unit setting up captive power plants will be exempted from payment of 50 per cent of electricity duty for a period of 5 years for self-consumption from the date of commissioning. The energy department, however, raised objection to the facilities being provided to CPPs under the IPR, 2007.

Quoting recommendation of the Expert Committee of Revenue Enhancement Measure formed under chairmanship of S C Hota, Energy Secretary G Mathivathanan in the letter to his counterpart in th industries department, said "Captive Power Plants need not be encouraged as they cause loss of electricity duty to the state as well as loss of cross subsidy which would be otherwise available to targeted consumer groups."

As per the existing IPR, CPPs not only utilise power for captive consumption within the state, but also export power for captive consumption of units outside in which the state was losing electricity duty as well as cross subsidy for that quantity of power, Mathivathanan said. Industries also put up CPPs with capacities in excess of their captive requirement and used the power generated from merchant trading, the energy secretary said in the letter.

Besides, the committee constituted under the chairmanship of Finance Secretary on comprehensive policy recommendations covering coal mining, coal washery and washery reject based power plants in Odisha, has also recommended that the exemption from payment of 50 per cent of electricity duty for CPPs set up by new IPRs be withdrawn. "Necessary amendment in the IPR-2007 to be made to this effect by industries department," the committee said in its report.