Taking note of the delay in setting up thermal based ultra mega power projects (UMPP) in Karnataka and four other states in his budget speech, Finance Minister P Chidambaram urged the respective state governments to clear all hurdles to expedite the projects.   

Of the nine UMPPs proposed, bidding is complete in respect of three projects and the forth one will be awarded soon. For speedy work on implementation of the remaining projects, the respective state governments should seriously swing into action, he said.

Realisation of the target of producing additional 78,577 MW power during the current 11th Plan, is contingent upon the successful completion of the proposed ultra mega power projects. As an incentive for expeditious work on these projects, the Minister announced reduction of the customs duty on project-related imports from 7.5 per cent to 5 per cent, which has been a demand of the private sector participants in the projects. Due to shortage of power equipment manufacturers in the country, industry players had demanded that the Centre should reduce the custom duty on imported power equipments.

The Minister also announced the creation of a national fund to push through reforms in the transmission and distribution segment, as a concrete measure to address T&D losses. Apart from this, Rs 800 crore would be provided in the budget for the next fiscal year for accelerated power development and reforms project.