Group captive power plants may have to rejig equity structure

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Captive power plants held by a group of consumers may be forced to undergo major restructuring as the government proposes to ask them to correct their equity and shareholding structure.

The power ministry is likely to issue stringent guidelines for such plants in a month and has temporarily suspended conversion of independent power plants to group captive power projects, a senior official in the power ministry said.

Group captive power plants — based on coal, solar and  are operational in large numbers in the states of Karnataka, Haryana, Rajasthan, Maharashtra and Tamil Nadu. The concept has been evolved by industries to avoid the cross-subsidy charges levied on inter-state electricity sale and is seen as a threat to state discoms. The power ministry official said that complaints have been received from various sections that industries are misusing the concept by taking members through shallow investments of small amounts and without giving them voting rights
The official said an amendment to the policy on group captive power plants is in the final stages of preparation and is likely to be issued in a month. The draft policy was issued for public comments in October last year. The power ministry has decided to change the definition of ownership of the group captive power plants, the official said, adding this would require the group captive projects to correct their equity holding accordingly in a limited time period.

As per the Electricity Act 2003, group captive power plant, unlike individual captive power plants, is a structure where a developer sets up a power plant for collective use of many industrial consumers who should have 26 per cent equity in the plant and must consume 51 per cent of the electricity produced. The plants are entitled to non- use of transmission system without any additional surcharge.

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