Government Mulls Extension for Mega Power Projects to Finalize PPAs, Aiming to Boost Energy Infrastructure – EQ
In Short : The Indian government is considering extending the timeline for power projects under the Mega Power Policy by 2–3 years to sign power purchase agreements (PPAs). The move could benefit six projects with a combined capacity of 8 GW, allowing developers to secure long-term contracts and retrieve bank guarantees worth ₹4,000 crore, addressing challenges in securing PPAs amid limited tenders.
In Detail : The Indian government is considering extending the deadline for power projects under the Mega Power Policy to sign power purchase agreements (PPAs) by an additional 2–3 years. This move is aimed at projects that have either not signed PPAs or have only partially signed agreements with distribution companies. The proposed extension seeks to provide more time to secure contractual commitments.
This potential extension would significantly benefit at least six mega power projects, collectively having a planned capacity of approximately 8 gigawatts (GW). Of this total, around 4 GW remains untied due to unsigned or partially signed PPAs. By allowing more time to finalize these agreements, developers could also retrieve bank guarantees worth about ₹4,000 crore, which are currently at risk due to delays.
The Mega Power Policy, introduced in 2009, was designed to promote large-scale power generation by offering benefits like customs duty exemptions and excise duty waivers. To qualify for these incentives, projects must secure long-term PPAs with distribution companies. However, challenges such as limited power procurement tenders from states have made it difficult for many projects to meet the required criteria within the stipulated timelines.
In 2022, the government had already extended the deadline for furnishing final mega certificates to tax authorities from 10 to 13 years from the date of import for ten provisional power projects. This previous extension was aimed at allowing developers more time to complete certification processes and obtain tax benefits. The current proposal follows a similar rationale, aiming to accommodate evolving project timelines.
The government’s move reflects its commitment to supporting the completion of infrastructure projects that are crucial for ensuring the country’s energy security. By providing more time for finalizing PPAs, the authorities are acknowledging the practical challenges that developers face in securing long-term contracts amid fluctuating market conditions and regulatory changes.
Extending the timeline under the Mega Power Policy could boost confidence among developers and investors by reducing financial risks. This step is expected to facilitate the execution of planned projects, enhancing the power sector’s capacity and contributing to India’s goal of achieving reliable and sustainable energy growth.
