Processing fee of projects up by 20 times

Processing fee of projects up by 20 times

High fee will encourage only genuine players, says minister

Here is another shocker for private power producers. Soon after preparing a draft policy on power production in renewable energy, without any consultations, the government has also passed an order, increasing the processing fee for renewable energy projects by a whopping 20 times.

The order passed on June 26, 2009 states that private producers of wind, small hydro, biomass, co-generation and solar projects will have to pay a Detailed Project Report (DPR) processing fee of Rs 5 lakh per megawatt. The previous rate was Rs 25,000 per megawatt (MW).

DPRs are an essential part of the project, which have to be furnished by the power producers, detailing everything from location and topography to machinery and civil work details. The fee revision was reportedly proposed by Bescom MD Tushar Girinath, who was holding additional charge as MD of Karnataka Renewable Energy Development Limited (KREDL), earlier this year.

Smaller private producers are crying foul over the huge fees and this is in addition to a security deposit that has to be paid, which is another Rs 5 lakh per MW. This money is refundable only if the producers complete the project within the specified time. According to the draft policy, this period is three years, a time frame, most power producers complain, is not enough to complete a project.

A private producer of small hydel project complained that even though the DPR has to be submitted after the allotment of the project, the money for the DPR processing and the security deposit has to be paid upfront, along with the application fee, even before the allotment of the project to a particular company. “Even though all the work starts after the allotment which is given after a pre-feasibility report, we have to pay the money upfront. So if a producer is applying for a 10 MW project, Rs 1 crore has to be paid upfront, merely for the fees. How will this move encourage any investor,” the producer questioned.

But the government on its behalf is sticking to the stand, stating that they want to encourage only genuine investors. A department official said that some of the bigger players in the power sector had monopolised the field, especially wind energy and had locked the capacity allotment without allowing other producers to take part in any of the projects.

Minister K S Eshwarappa maintained that they wanted to break the land mafia that was selling land to other players, after capacity allotment. “The high fees will ensure that only the genuine players will be seeking allotment for projects,” the Minister said.

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