About 200 MW of wind and solar power plants in Tamil Nadu are in the danger of losing incentives because the State government has been unable to appoint a person to the post of Chief Electrical Inspector to Government (CEIG).
Power projects set up in the State cannot begin to operate unless the CEIG gives the Safety Certificate.
After V Jayavel superannuated from service on February 28, the post fell vacant.
The problem wind and solar developers in the State are facing is, unless they get the Safety Certificate, they will not be able to declare the ‘commercial operation date’(COD).
Unless they get the COD by the end of March, they will not be able to claim benefits such as accelerated depreciation and ten-year income tax holiday under Section 80 IA of the Income-Tax Act. In addition, wind companies will lose the ‘generation-based incentive’(GBI).
Tax holiday scheme
While the depreciation benefit will stand halved with effect from April 1, the tax-holiday scheme and the GBI are expiring on March 31.
These benefits make a huge difference to the rate of return of the projects. One solar company said it could lose about ₹70 crore over the life of the plant.
A State government official said that the CEIG appointment would be done “in one or two days”, but several renewable energy companies reacted to that saying “that is what they have been saying for over ten days.”
Power struggle in party
The reason for the delay in the appointment is not clear. Some say that several key appointments have got stuck on account of the power struggle between the two factions of the ruling AIADMK party.
Others say that the government is just unable to decide on whom to appoint. .
One wind power company official noted that if investors lose tens of crores of rupees due to such a simple issue as an official appointment, it would badly affect the image of Tamil Nadu as an investor-friendly state, especially at a time when the government is preparing to organise the second Global Investors Meet later this year.