Modification of Electricity Act for Deemed Licensing to SEZ Developers
IN terms of the Guidelines for Power Generation, Transmission and Distribution in Special Economic Zone (SEZ) dated February 27, 2009 issued by the Commerce Ministry vide N.o dated 27th February, 2009 it is stipulated as follows:
Requirement of License
While a generating company may establish, operate and maintain a generating station without obtaining a license under Electricity Act, 2003 subject to compliance of the technical standards as specified in the said Act and conforming to the definition of generating company under the provisions of the said Act, distribution of power is a licensed activity as specified in section 14 of the Electricity Act 2003 except the situation specified in the 8th proviso to the said Section.
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Distribution Licence
In concerned and upon the recommendation of the State Govt., Deptt. of Commerce will issue necessary Notification under Section 49 of the SEZ Act in consultation with the Ministry of power.
Provided that any State Government can recommend to the Department of Commerce that any power distribution facility coming up in any SEZ in that State can be granted distribution license by the Department of Commerce in consultation with the Ministry of Power. Department of Commerce will issue necessary notification under Section 49 of SEZ Act.
All the provisions of the Electricity Act, 2003 and Electricity Rules, 2005 as amended form time to time by the Ministry of Power along with various power resolutions issued by the Ministry of Power will be applicable wherever warranted to power generating units, whether stand alone or captive power generating units, transmission facilities and power distribution facilities in the SEZs.
Further the provisions of Section 14 and clause(b) thereof of the Electricity Act, 2003 reads as follows:
Section 14 (Grant of Licence)
The Appropriate Commission may, on an application made to it under Section 15, grant a license to any person –
a)…………….
b) to distribute electricity as a distribution licensee; or
c)…………….
in any area as may be specified in the licence
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Now to overcome this licensing requirement for distribution of electricity by SEZ developers and in pursuance of the policy guidelines issued by the Commerce Ministry generation, transmission and distribution of power in SEZ, as extracted above, the Central Government by virtue of its powers under Section 49(1)(b) of the SEZ Act, 2005, notifies that the provisions of Section 14(b) of the Electricity Act, 2003 shall apply to all SEZs notified under Section 4(1) of SEZ Act, 2005 subject to certain modifications to the relevant provision of Electricity Act, 2003.
And the modification to Section 14(b) of the Electricity Act, 2003 in so far as it relates to SEZ is notified as follows by inserting the following proviso there under:
“Provided that the Developer of a Special Economic Zone notified under subsection (1) of section 4 of the Special Economic zones Act, 2005, shall be deemed to be a licensee for the purpose of this clause, with effect from the date of notification of such Special Economic Zone;”
So any entity in the SEZ other than the SEZ developer will still be governed by the provisions of Section 14 of the Electricity Act, 2003 minus the above proviso.