MIDC to invite bids for power plant planned in place of power SEZ

MIDC plans to invite bids for its planned 1,000MW power plant project in Maharashtra’s Chandrapur district. The corporation was earlier planning a power SEZ in this location, to ensure cheap power for the State

After initially announcing plans for developing a power special economic zone (SEZ), Maharashtra Industrial Development Corporation (MIDC) has now scaled down its Chandrapur power project to a plain vanilla 1,000MW power plant. Bids for the private development of this power plant are expected to be called for this month.

"All the required clearances are on the way. Now we are going ahead to tender it out to the private sector," said Dr K Shivaji, chief executive officer, MIDC. The plant which is situated at Bhadrawati in Chandrapur district would be given out to private developers on a public-private partnership. The bids are likely to be invited this month.

In 2006, MIDC had announced plans for setting up power SEZs. However, four years later, the government body has scrapped the power SEZ plan and is now developing the Chandrapur project as a simple power plant.

Power SEZs were first planned in order to produce cheap power in the State. A power SEZ would have allowed using duty fuel in producing power. In addition, the construction costs would have also reduced considerably as the material used for plant construction would have also been duty-free. "This will help us to generate power at a cheaper rate," Rajiv Jalota, former chief executive officer, MIDC, was quoted as saying in a media report in 2006.

At present, Maharashtra faces a peak power deficit of 24.4% or 4,724MW and an energy deficit of 21.5% or 2,609MW. While around 2,100MW of power has been added in the State during the 10th Five Year Plan, there has been no contribution from the private sector. Major cities in the State face issues like load-shedding for several hours, due to the acute power shortage.

This 1,000MW capacity to be added through the power SEZ would have been significant and economical for the State. As per Central Electricity Authority (CEA) data, the State's energy requirement is around 12,132MW out of which around 9,523MW is available.

Maharashtra Electricity Regulatory Commission (MERC) chairman VP Raja has also emphasised the need for power projects to fructify on time, to ensure better power supply in the State. "For the State to become power sufficient, there are enough projects on the table at present, but the original ground-level issues like land acquisitions are a concern. There are a lot of projects on the shelf, but how many of them fructify (is to be seen)," he had said in an interview with Moneylife.


Primary objective is curbing inflation: RBI report

The central bank said the main challenge it is currently facing is adopting a ‘calibrated exit’ from the unprecedented monetary accommodation

Concerned over the continuing inflationary pressures, a Reserve Bank of India (RBI) report on Thursday said the primary objective of the monetary policy would be to ensure price stability, amid expectations that the central bank would raise short-term rates in its 27th July monetary review, reports PTI.

"Inflation pressure will remain", the RBI said in its Currency and Finance Report 2008-09, and pointing out that "important challenges for the monetary policy authorities would be (to) ensure financial stability, although price stability should continue as the primary objective of the policy."

The central bank said the main challenge it is currently facing is adopting a "calibrated exit" from the unprecedented monetary accommodation.

RBI's statement comes ahead of the monetary policy review, scheduled for 27th July, during which the central bank is expected to take steps to contain inflation, while ensuring adequate liquidity to the productive sectors of the economy.

After the deepening of the global financial crisis, RBI had cut its key rates to provide funds to the cash-strapped financial system. However, after the recovery, it started tightening policy to tame rising inflation since late last year.

The RBI had raised the key policy rates by 25 basis points each in March and April. It hiked the lending and borrowing rates (repo and reverse repo) to 5.25% and 3.75%, respectively. The cash reserve ratio or the amount of deposits banks have to park with RBI, was hiked to 6%.

The wholesale price-based inflation touched 10.16% in May. The food inflation, however, eased to 12.92% for the week ended 19th June from about 20% in December last year.

Even as food inflation eased substantially by nearly 4 percentage points during the week ended 19th June from over 16.90% a week ago, economists expect RBI to focus on taming inflation.

"Policy focus will remain on containing inflation. The Reserve Bank has to lean over demand pull inflation and it will have to constantly monitor demand," Yes Bank chief economist Shubhada Rao said.


Diesel price to go up by Rs3.14 per litre on deregulation

Oil secretary S Sundareshan said the government had not decided to limit the subsidy on diesel to Rs1.50 per litre and pass on the remaining required hike to consumers. "The decision of the EGoM is that diesel price will be market-determined. The actual decontrol will happen in future", he added

Diesel prices will have to be hiked by another Rs3.14 per litre if the government is to implement its decision to decontrol diesel rates, like it has done in the case of petrol, reports PTI.

When an Empowered Group of Ministers (EGoM) on 25th June decided to raise diesel price by Rs2 per litre in preparation for an eventual freeing of rates from government control, the gap between domestic rates and the imported cost was over Rs3.50 per litre.

The calculations done on 25th June were mostly based on the average international price in the first fortnight of June.

After the hike, the gap had narrowed to just Rs1.50 a litre.

"Today, the under-recovery on diesel is Rs3.14 per litre," Indian Oil Corporation (IOC) chairman B M Bansal said on Thursday.

This is because from 1st July, the rates are calculated on the basis of the average of the second fortnight of June, when global oil prices had firmed up.

Mr Bansal said the under-recovery on kerosene is Rs15.60 per litre, while it is Rs201.80 per 14.2-kg liquefied petroleum gas (LPG) cylinder.

IOC, Bharat Petroleum and Hindustan Petroleum were projected to lose around Rs53,000 crore on selling fuel below cost this fiscal after the EGoM decision to free petrol price led to a Rs3.50 a litre hike in the rates in Delhi, an Rs2 per litre increase in diesel prices, an Rs3 per litre rise in kerosene rates and a Rs35 per cylinder increase in the cost of LPG.

But the industry is now projected to lose Rs57,700 crore this fiscal on selling diesel, LPG and kerosene below cost, with IOC alone projected to lose Rs32,250 crore in 2010-11.

Oil secretary S Sundareshan said the government had not decided to limit the subsidy on diesel to Rs1.50 per litre and pass on the remaining required hike to the consumers.

"The decision of the EGoM is that diesel price will be market-determined. As of now the price has been raised by Rs2 per litre. We are following that," he said.

The actual decontrol will happen in "future", he said, without giving a timeline.

The talks of limiting subsidy on diesel to Rs1.50 per litre was a "personal opinion" of chief economic advisor Kaushik Basu, he said.


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