Power plants in SEZs may get to sell only 25% power outside

NEW DELHI: Units setting up power plants in special economic zones may have a tough time when it comes to supplying surplus power to the grid. These units will have to sell 75% of the power generated to the SEZ, the zone and the units located there. The balance 25% power will have to be sold at a rate that the units in the domestic area are not at a disadvantage.

The revenue department wants units producing power in SEZs to sell the balance 25% power to domestic tariff area at a price that no undue benefit or profiteering occurs. This is because these units get huge customs and excise benefits on the plant and machinery, which are not available to their counterparts in the domestic tariff area.

While the guidelines for setting up of infrastructure in SEZs have been notified on October 27, these conditions could be brought in. Restricting power producers in SEZ on the basis of pricing has been discussed earlier also in the board of approval meetings. With this measure, if the units sell power they will have to build in the cost of the customs and excise duty, which they have got exemption from and then work out their cost structure.

These guidelines will address the concerns, which were expressed when some of the players had announced power plants in SEZs with capacities, much higher than what could have been the requirement of that SEZ. While the unit may generate power, it will have to sell 75% to its generation to the zone itself.