On February 25, 12 days before election dates were announced, the Modi government took a decision that handed Adani Group the first-of-its-kind victory: a power project owned by the conglomerate in Jharkhand became the first standalone power project in India to get the status and benefits that come with a Special Economic Zone
(SEZ) tag. And in order to make way for this decision, the commerce ministry amended power-related guidelines for SEZ earlier this year, a report published by Scroll.in said.
An SEZ is a geographical region that has economic laws that are more liberal than a country's domestic economic laws. These regions get a host of duty waivers, tax exemptions and faster clearances as well. The SEZ status given to the Adani power project is going to save the firm billions of rupees in taxes and Rs 3.2 billion in clean energy cess alone.
Jharkhand will not use power produced from plant
The project is a coal-fired power plant that is coming up in Godda district of Jharkhand and the amended guidelines mandate that all the electricity produced in the plant to be exported to Bangladesh. This means that Jharkhand will not get any electricity produced from the plant.
This is in stark contrast to Jharkhand's energy policy that requires all power plants to supply 25 percent of the total electricity produced locally. Earlier in 2016, the Bharatiya Janata Party (BJP) in Jharkhand had allowed Adani to charge a higher price for electricity in comparison to other power plants in the state.
Centre had to amend SEZ guidelines
To make the Adani project eligible for the SEZ status, the Centre amended the 2016 guidelines that placed a bar on the setting up of a standalone power plant in an SEZ. The amendment was moved by the commerce ministry on December 28, 2018, and it was forwarded to the Board of Approval for SEZs on January 9, minutes of the board meeting accessed by Scroll.in
In February, the board, which had earlier rejected the same proposal in 2018 because it did not fulfil the required criteria, approved the proposal. It is not clear if Jharkhand backed the Adani proposal the second time it was moved.