Power Minister Sushil Kumar Shinde told Parliament Wednesday the government recently approved a policy expected to boost hydropower development.
He said the existing dispensation available with government-controlled companies under the national tariff policy 2006, regarding exemption from tariff-based bidding up January 2011, was extended to private sector hydroelectric projects, which obtain concurrence of central electricity authority, sign power purchase agreements with distribution licensees and achieve financial closure before January 2011.
"State governments would be required to follow a transparent procedure for awarding potential sites to the private sector. In order to enable the project developer to recover the costs incurred by him in obtaining the projects site, merchant sale of up to a maximum of 40 percent of the sale-able energy has been allowed," Shinde said.
He said projects that do not confirm to the prescribed timelines would lose this incentive of merchant sales in graded manner.
"An additional 1 percent free power over and above 12 percent will be earmarked for a local area development fund aimed at providing a regular stream of revenue for income generation, infrastructure creation and welfare schemes in the affected areas," the minister said.