Financial Management Of Electricity Project Should Be Completed Within 5 Years

September 8, 2020 | Investopaper

Electricity promoters will be able to close the financial management of the project within five years of obtaining the construction license. The government has removed the previous three-year provision and maintained it for five years as per the new provision. The Department of Electricity Development (DOED) has stated that the directive has been amended in line with the objective of promoting private sector developers.

Department of Electricity Development has recently extended the duration of the power project by issuing the first amendment to the ‘Power Project Licensing Directive, 2075’. The department had earlier issued licenses to the promoter companies on the condition that the financial management should be done within two years. If it could not be done within the stipulated time, there was an arrangement to extend it by one more year. According to the same provision, the promoter company had to manage its finances within three years of getting the first license.

DOED has kept the previous provision unchanged and has made an provision to extend the term for another two years if financial management cannot be done within three years. Based on the progress made by the promoter company for financial management in a period of 3 years, a new provision has been made to extend the period for a minimum of 6 months to 2 years.

According to the new provision, the promoter companies will now be able to manage the project financially within five years of receiving the license. However, for the additional period, the capacity royalty has to be paid by the promoter at the rate of Rs 100 per kilowatt for the installed capacity of the project.

Provision Regarding Change In Share Ownership

The provision of seeking permission of the department to change the share ownership of the promoter companies has also been removed. The name of the promoter company licensed for power generation or transmission or distribution or survey, shareholder or share structure should be reported to the department along with the changed documents within 30 days. Earlier, the promoters had to get the approval of the department. The previous provision has been removed as it will be done through the Electricity Regulatory Commission.

Provision has also been made for the promoter companies to get the survey license of the same project again if they fail to get the construction license within the stipulated period. DOED has also made the provision to give such permission again if the survey license cannot be renewed in an out-of-circumstances situation.


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