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Compendium of State Government Policies on Renewable Energy Sector in India

ARUNACHAL PRADESH SMALL HYDRO POWER POLICY- 2007

DATED 24th JANUARY, 2008 & AMENDMENT DATED 13th OCT. 2008
Sl. No. 1 2 3 Order Title Policy Objective Description Summary No. PWRS/HPD/W-1305/2005 dated 24th January, 2008. And Amendment order No: PWRS/W-1305/2005/ Pt-I dated 13th Oct. 08 Small Hydro Power Policy, 2007 Private participation in development of Small Hydro Project with certain attractive incentives Formulation and notification an of action plan for small hydro power generation with players such as private entrepreneurs, cooperative societies and NGOs

Classification of SHP Projects

Category - I : Projects with installed capacity of above 1 MW up to 25 MW to operate in both Grid and Isolation mode. Category - II : Projects with installed capacity of above 100 kW up to 1MW to be designed for stand alone mode with or without connectivity to grid. Power supply to the consumers to be at High Voltage or Low Voltage Category - III : Projects of up to 100 kW shall be designed for stand alone mode without high tension systems.

Who Can Invest in SHP

Preference in allocation of Projects to be given to Local entrepreneurs with sole proprietorship /NGOs/Co-operative Societies / Joint venture concerns or Consortium of companies in which one or more than one partners to be Arunachalee. Any registered company from outside the State with differentiation in free power, upfront money and processing fee with that of local entrepreneurs Independent Power Producers (IPPs): To sell power to the State power Utilities / State Government under a Power Purchase Agreement (PPA) at a pre-determined Tariff as defined by the SERC or the State Government. Developer to be provided with open access facility for which a separate agreement with the State Transmission Utility (STU) at a tariff determined by the SERC / State Government. Merchant Power Producers (MPPs): To sell power to limited number of permitted pre-determined third party (or parties), preferably heavy power consuming industries set up within the State. MPPs to be provided with open access facility for which agreement has to be settled with STU State is not bound to purchase Power from MPPs. However, the State reserves the right to purchase power at a price as may be determined by the State/SERC. MPPs shall not be eligible for retail sale of power to general consumers to replicate the function of a DISCOM without a license. Power producers shall produce power only for their own consumption CPPs shall be treated at par with that of MPPs as far as the other conditions are concerned.

Commercial Categories of Power Producers

(A)

(B)

(C) Captive Power Producers (CPPs):

Compendium of State Government Policies on Renewable Energy Sector in India 7 Qualifying Criteria

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Developers to furnish an undertaking on legal papers committing to engage the technical personnel, either as permanent employees or partners in the organization, at the time of submission of application for allotment of projects. Qualifications of personnel to be employed for various category of projects are detailed in the policy Project sites for development to be identified and notified by the State Government, or A shelf of projects shall be maintained by the State Government for allocation. Developers may approach the State Government with self-identified projects with full pre-feasibility report (PFR) for development on concept to commissioning basis. Government shall allocate Projects to the eligible applicant for development on BOOT (Build, Own, Operate and Transfer) basis for a period of 50 years.

8 Projects Identification and Allocation

9 Process of Allotment Application for Allotment (i) Category I Projects (ii) (iii) Category II & III Projects Earnest Application fee

Managing Director (MD), Hydro Power Development Corporation of Arunachal Pradesh Ltd., Itanagar Chief Engineer (CE), Department of Hydro Power Development, Itanagar

Director, APEDA, Itanagar Non-refundable demand draft of Rs. 5000 per application drawn on State Bank of India, payable at Itanagar in favour of MD, CE and Director APEDA As per eligibility and qualification criteria Selected Developer to deposit the Processing fee and Upfront Premium (both non-refundable) at the time of signing of the Memorandum of Agreement (MoA) with the State Government, failing which, the State Government shall have right to re-allocate the project to any other eligible developer Category of Hydro Project Processing fee Rs. (per project) Minimum Upfront Premium payment Rs. (per MW)

(iv) Selection of Developers (v) Processing Fee and Upfront Premium

Category I (a) > 10 MW up to 25 MW Indigenous Developers Non-indigenous Dev. (b) > 5 MW up to 10 MW Indigenous Developers Non-indigenous Dev. (c)> 1 MW up to 5MW Indigenous Developers Non-indigenous Dev. Category II >100kW up to 1000kW Indigenous Developers Non-indigenous Dev. Category III Up to 100kW Indigenous Developers Non-indigenous Dev. 10,000 20,000 Nil Nil 15,000 30,000 Nil 10,000 (per project) 50,000 1,00,000 35,000 70,000 25,000 50,000 20,000 40,000 15,000 30,000 10,000 20,000

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Compendium of State Government Policies on Renewable Energy Sector in India Note: The local entrepreneurs / Indigenous developers /NGOs/Co-operative Societies, if applies under Joint venture or Consortium of Companies, the chargeable Processing Fee and Minimum Upfront Payment will be that of Nonindigenous Developers. (vi) Upfront Premium (vii) Preference to Indigenous Applicant Memorandum of Agreement (MoA) Not to form part of the project cost In case of more than one applicant meeting the eligibility and other criteria, preference to be given to indigenous applicant of the district in which the project is located Project completion time and COD as per proposal or agreed by the Government to be incorporated in MoA A High Level Selection Committee to examine the proposals of the prospective developers and submit its observations / recommendations to the State Government. Selected developers to sign the (MoA) within 30 days from the date of issue of Letter of Selection. Within 12 months from the date of signing of the MoA, the selected developer shall complete all post allotment obligations including preparation of Detailed Project Report ( DPR), possession of the project site and obtaining all statutory clearances of the State Government Developer to submit DPR with all clearances to the Secretary (Power), to enable State Government for examination and approval within three months. DPR of the selected developer submitted for System Coordination and Techno-Economic Clearance (SC&TEC) to be scruitnised by Standing Committee on Technical and Economic Affairs If project is not found feasible by the Standing Committee on Technical and Economic Affairs, the State Government, upon mutual understanding with the developer, shall terminate the agreement and the upfront payment shall be refunded to the developer without interest Upon failure of the developer to commence work at the project site within 18 months from the date of signing of the MoA, the agreement shall stand automatically terminated. Upfront payment shall be forfeited. Statutory regulations of the Central Government / CERC and the State Govt. / SERC while implementing the project. Provisions of the Forests (Conservation) Act, 1980. Developer to pay the cost of raising the compensatory afforestation including payment of the Net Present Value (NPV) of the forests land being diverted for non-forest purpose under relevant Forests (Conservation) Act, 1980 and Environmental Protection Act, 1986. To labour welfare under the Labour Laws/Acts during the implementation / operation and maintenance of the Project. The provisions of the Electricity Act 2003 and other laws and rules framed under such laws shall apply on the Projects under this policy. Land for project and other allied infrastructures shall be leased to the developer against payment of land revenue as per relevant tariff of the State Government. The period of lease to be continued till the BOOT period of the project.

(viii) 10

Single Window Selection

11 Statutory Clearances

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Time Schedule for Commencement of Work

13 Compliance to Statutory Regulations by the Developer

14 Land Acquisition

15 Maintenance of Law and Order

Is the responsibility of the State Government in and around the project area for security and safety of personnel and properties of the project.

Compendium of State Government Policies on Renewable Energy Sector in India 16 Rehabilitation and Re-settlement Equity Participation Sale of Power

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Rehabilitation and Re-settlement works for displaced persons due to the project shall be financed by the developer, as per relevant law/guidelines of the State. The State Government shall reserve the right of equity participation on mutual understanding with the developer through its agency on Joint Venture. IPP can enter into contract to sell power to the State Government through a PPA to be signed within 6 months after signing of MoA at a tariff 10 paise lower than the tariff as determined by the CERC/SERC or the State Government for sale outside the State. Point of sale of power to be at the place of injection to the State grid, unless incorporated in the PPA. Metering point shall be located at the point of sale defined in the PPA. Developer under IPP/MPP/CPP category may be allowed after prior approval of the Government to sell power outside the state only under a special license in the event of surrender of contracted power. Similar licensing can also be considered by the state in the situation of closure of the industries forcing the project to idle. State shall reserve the right to purchase the idle power from MPP/CPP. The State Government shall open Letter of Credit (LC) in favour of the Developer in State Bank of India, Itanagar for an amount which would be specified in the PPA for regular transactions of power purchased from the IPP/MPP/CPP etc. as the case may be.

17 18

19 20

Banking of Power Transmission System and Evacuation

Not allowed without prior permission of the State Government. STU and the developer to enter into an Agreement about Power Evacuation System and open access facility before the final investment decision. Letter of Comfort on Transmission (LCT) can be obtained from the STU before submission of application/ expression of interest (EOI) for allotment of the project. Transmission System which forms a part of the project to be specified in the LCT. Developer to bear the cost of transmission network from the project to the point of sale. Transmission system and other allied facilities will be made available to all developers for Open Access and Wheeling of Power. Developers to enter into an Agreement with the STU for payment of wheeling rate as may be determined by the SERC/State.

21 Wheeling Charges 22 23 Transfer and Sale of Power Plant Free Power and other Charges

Not allowed without the prior permission of the State Government As an incentive for timely completion, there shall be a moratorium of free power. Free power concessions to be made at the concessional rates. Moratorium period to be counted from the COD. Moratorium Period Rate of free power from scheduled COD after Moratorium period up to 50th Year One Year One Year Two Years Two Years 5% 10% 2.5% 8%

Category of Hydro Project

(a)

> 10 MW to 25 MW Indigenous Developers Non-indigenous Dev. >5 MW to 10 MW Indigenous Developers Non-indigenous Dev

(b)

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Compendium of State Government Policies on Renewable Energy Sector in India (c) > 1 MW to 5 MW Indigenous Developers Non-indigenous Dev Up to 1000 kW Indigenous Developers Non-indigenous Dev.

Three Years Three Years

Nil 5%

(d)

Nil Nil

Nil 2.5%

Note: The local entrepreneurs / Indigenous developers /NGOs/Co-operative Societies, if applies under Joint Venture or Consortium of Companies, the chargeable Free Power will be same that of Non-indigenous Developers. 24 Force Majeure State Government not responsible for any losses arising out of the force majeure situation, i.e., earthquake, flood, fire, external invasion, civil commotion, landslide etc. No claim by the developers on above account shall be entertained by the State Government. State Govt. shall facilitate in obtaining subsidies, tax concession etc. as may be available from the Central Government for development of SHP. State Government shall allow 50% share of Carbon Credit Carbon Trading under CDM. benefit from

25 Incentives by State Government 26 Intellectual Property Right

Indigenous tribal entrepreneurs shall be exempted from supplying free power to the State Govt. for projects up to 5 MW capacity.

In the event of transfer of Intellectual Properties related to the project design, data, DPRs, etc. the cost of such properties shall be payable to the owner of such properties by the party/(parties) to whom it would be transferred. Developer to spell out the employment opportunities for the bonafide Arunachalees in the application. This shall be one of the selection criteria for allotment of project. Endeavours shall be made by the developers to employ local ITI Certificate holders during the construction, operation and maintenance of the projects. They should also be ready to take technical manpower on deputation from the State Government Departments and Organizations.

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Employment Opportunities

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Monitoring of Projects

Government shall have the right to monitor physical and financial progress of the projects on monthly/quarterly/half yearly basis through a Technical Committee headed by the Secretary (Power and NCER), Govt. of Arunachal Pradesh. Developers shall be liable to pay all the statutory levies viz. royalty on forest products, river bed materials, duties and taxes unless specifically exempted. Allotment of a project to a developer does not automatically confer him any territorial rights on both upstream and downstream sides of the project area. Developers shall facilitate using of tail race water for Agriculture / Horticulture purpose wherever it is found feasible and necessary. State Government shall have the right to use the tail race water for any other purpose including development of Hydro Projects on its own or allot to some other party. Developers shall make all necessary protective arrangements on upstream, downstream and tail race areas of the projects site to avoid soil erosion and damage to properties. Developer shall pay an amount worked out at the rate of 1 paise per unit of power sold during every financial year to the State Government for raising local area development fund effected by the Project (s).

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General Conditions