provided that the terms, conditions and tariff for such sale, shall, in respect of a generating company wholly or partly owned by the central government, be such as may be determined by the central government and in respect of a generating company wholly or partly owned by one or more state governments be such as may 5 be determined, from time to time, by the government or governments concerned" 12, for section 55 of the principal act, the following section shall be substituted, namely: - substitution of new sec tion for section 55 "55 (1) every licensee shall comply with such reasonable diree- 19 tions as the board may, from time to time, give him for the purpose of achieving the maximum economy and efficiency in the operation of his undertaking or any part thereof, compfiance of direetions of the regional electricity board, ete by licen- (2) every licensee or generating company shall follow all the directions of the regional electricity boards and shall conduct their js operations in accordance with the instructions of the regional load despatch centre s0 as to ensure integrated grid operations, sees or genera ting companies (3) tf any dispute arises with reference to the integrated grid operations as to whether any direction given under sub-section (1) or sub-section (2), is reasonable or not, it shall be referred to the 20 authority, whose decision thereon shall be final; so, however, pending the decision of the authority, directions of the regional electricity boards or the regional load despatch centres shall prevail in the interest of smooth operation of the integrated grid" 13 in section 75a of the principal act,— 25 (3) sub-section (1) shall be omitted; amendment of section wba (ii) in sub-section (2), for the word "promoting" wherever it occurs, the word "competent" shall be substituted; (iii) for sub-section (3), the following sub-section shall be substituted, namely:— 30 "(3) for the purpose of preparing the statement of accounts referred to in sub-section (2), the depreciation to be provided every year shall be calculated at such rate as may be specified by the central government, by notification in the official gavette, in accordance with the provisions of section 43a"; (wv) sub-section (8a) shall be omitted; (v) in sub-section (4), for the words, brackets and figure "'sub- sections (1) and", the words "sub-section" shall be substituted  14 in the sixth schedule to the principal act, in paragraph xvit—amendment of sixth schedule ) in sub-paragraph (2), in clause (c), after sub-clause (va), the 40 following sub-clause shall be inserted, namely: - _"(vb) debt redemption obligation of the private licensees which may be done on a year to year basis, taking into account35 the requirements of debt redemption and resource generation through depreciation, retained surplus;"; (ii) in sub-paragraph (6), for clause (b), the following clause shall be substituted, namely:— "(b) interest charges on capita] expenditure incurred during the period between the date of grant of the license and the date when the undertaking commences supply, from borrowed money and properly attributable to the assets as actually accrued up to the date of such supply, as well as interest incurred on outlays for subsequent expansions;"; 10 in sub-paragraph (10), in clause (b), for the words "part of capital base for that year, the reserve bank rate ruling at the beginning of that year, plus two per centum", the following words brackets and figures shall be substituted, namely:— 15 "capital base for that year, the reserve bank rate ruling at the beginning of that year plus— (i) two per centum for investments made up to the date of the commencement of the electricity laws (amendment) act, 1991; and (ii) five per centum for investments made thereafter:"20  statement of objects and reasonsthe indian electricity act, 1910 deals with the supply and use of © electrical energy and the rights and obligations of the licensees the electricity (supply) act, 1948 deals with the statutory powers and functions of the central electricity authority, state electricity boards and generating companies 2, it is proposed to widen the scope of private sector participation in power generation, supply and distribution by suitably amending the aforesaid acts, the main amendments are as follows,— (a) section 6 of the indian electricity act, 1910 which deals with the period of license is sought to be amended to enhance the said period of license to 30 years followed by subsequent extensions for 20 years at a time this will ensure reasonable stability in the operation of the license (b) section 2 of the electricity (supply) act, 1948 (hereinafter referred to as the said act), which defines various expressions, is proposed to be amended to give effect to certain changes in the definitions and also to define certain new expressions clause (4a) is proposed to be substituted to remove the exclusion of private sector from the definition of "generating company", as it permits only the companies formed by the central government or by any state government or jointly by the central government and one or more state governments (c) section 15a of the said act which deals with the formation, objects, etc, of generating companies is proposed to be amended so as to provide for the establishment of generating companies in the private sector as well as in the joint sector (d) section 29 of the said act which deals with the submission of schemes involving capital expenditure exceeding rupees five crores to the central electricity authority is proposed to be amended in the interest of flexibility, keeping in view the escalation in the cost of projects and to provide for revision from time to time of the prescribed limit of project cost requiring such clearance (e) a new section 43a is proposed to be inserted to the said 'act to provide for the terms and conditions and tariff for sale of electricity by the generating companies (£) section 55 of the said act which provides for the licensees' compliance with the board's directions is proposed to be amended to ensure that the licensees as well as generating companies shall comply with the directions issued by the designated coordinating agencies in the matter of generation and supply of power(g) paragraph xvii(10) (b) of schedule vi to the said act is proposed to be amended to raise the standard rate from the existing level of 2 per cent over the reserve bank of india rate to 5 per cent over the reserve bank of india rate to motivate equity investment in the power projects set up by licensee companies 3 the bill seeks to achieve the above objects, new deu; the 30th august, 1991 kalp nath rai, annexure extract from the indian electricity act, 1910 (9 of 1910)     ee 6 (1) where a license has been granted to any person, not being a orn' jocal authority, the state electricity board shall,— takings   +   (b) in the case of a liceise granted on or after the commencement, of the said act, on the expiration of such period not exceeding twenty years and of every such subsequent period, not exceeding ten years, as shall be specified in this  half in the license; have the option of purchasing the undertaking and such option shall be exercised by the state electricity board serving upon the licensee a notice in writing of not less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period referred to in this sub-section :     extracts from the electricity (suppty) act, 1948 (54 or 1948)     interpre- 2 in this act, unless there is anything repugnant in the subject or tation, context,—      (44) "generating company" means a company formed— (a) either by the central government or by any state goyernment; or (6) jointly by the central government and one or more state governments or by two or more state governments, and registered under the companies act, 1956;      rst? 15a (1)      tion, (2) the main objects of a generating company shall be— objects ' n juris (i) establishing, operating and maintaining generating stations diction, and tie-lines, sub-stations and main transmission lines connected ete, of therewith; gene- ; , rating () operating and maintaining such generating stations, tie- come lines, sub-stations and main transmission lines as are assigned to it panies, by the government or governments forming the generating com- pany (hereinafter referred to as the promoting government)ey jo adoo & 'sjuautusea0s surjouord ay} jo auo 10 yuawwueacs suyour cord oy} sf juauiuieacd [exuad ey} ysiym 0} uonlier ui lueduiog bur ~yerouan e aq posedaid uvaq sey ewayos 24} a1dym yey, papraoig {peutiduod s}ubuiutaadh 248} io juauiuiaach aybig ey) 0} papremsot eq teys (¢) uornsas-qns zapun auedwiog sunerauay oy) 'oq eur aseo ay} se "10 prkog ay} aq poredead ayeuy eutoyos ay} yo adoo y (f)      '72 "ay -ouny jo aouauang wo? joy samioyps jo wors -suqng '9oubiinduod sf jof aqlioyiny ay} 0} payyuqns oq 'uok, veaedaid sy1 sayye aq avut se uoos se '[[eys saadna jo ar0i0 2ay sutpaeoxs amppusdxe eydeo & aaqoaut oy payeuyso auiayos atoag (7) "6z    « s —ayoyyny ey} aq payloads oq av se jouuew yons uf 'yt -alay} pazyeuuod sauuit woisstuisuei} pur suoteys-qns 'seut-o4 pue suore}s suneraues surystqeyso joy 'aq avur aseo ayy se 'spreog a0 prog oy} yim uoneutpro-09 uf 'soutoyas axedord pue suonesnsaaut petteyep '[z woysas jo suorstaosd ay} 0} yaalqns "yno aareo of (a) pue 'yymerey} payauuoo 'aue jr 'uiaysxs zamod ay} 1aa0 joxjuod suraey aouese jo yusuruseaocy oy} pue 'aq aeurt aseo ayy se 'spavog, jo preog ay} yim uoneutpio-09 ut sjuauiuaeaos sutouiord jo jueuurea0s suyouosd ayy sq 4 0} pauiisse 'saul] uorsstuisur sy uyeu pue suor}e4s-qns 'saulf-ay 'suorjels suyeieuad ay} touurut [eo -twouoss pue yualoyje jsour ay} ur 'ureyuleut pub ayesado 04 (q) i | {kuedwog sur "yeivuah py} 0} uowliai ur sjueuuieacs suyowosd 10 yueuru1ea0% sunoutord oy, aq paysyqeyso oq 0} pasmmbar aq seu se 'qydorey peyeuuoo sauit uoiss(uisubt} uleu pue suot}e}s-qns 'souly-a pue suoneis buyerouad yons urezureur pue oyesedo 'ysqqeysa 0} (v) "ued =a aun -px91195) jo sonn —4jeureu 'seynp sumorpoy ayy yim passeya oq jjeys aued "wd sunereued & yoy sim} jo suoisiaord ayy 04 yalqng (1) "wet      "py sty} japun aueduiog superauar & aq of 'sasodind [je 10f 'pauteap aq [peys '(2) uorksas-qns ut peyroads sdoyyeut 2q} jo aue 40 [[e sjoatqo ureur syt se survey 'uaweousuu0 yons uo buruonouny pue aputof 'syuautusaa05 421g e10w jo om} jo 's}uaue "uioaod 2324s p1oul jo euo pue juauiuaeaoh [eiyuad ay} jo juowuivach areig aue to juawuraaoy pexued ey} aq '9161 'oouvuipie juauipuouty (4[ddng) apornoaty ayy jo quoweouewt09 ayy aroyaq paursoy 'gcgr voy seruedwoy ay} jo ¢ uondas yo suravout ayy uri auedwoo y (4) 'preog oy} jo jaquiow v 0} sjdde avy} se sueduioy suyerouay ve jo sxoyeap jo preog ay} jo zequieur arana 0} sjdde 'eq kew se sey os 'tpeys § uorses jo suoistaord ou (9)      'yoorayt staquioul outy-[[nf se payusodde aq eu 'syuoucra03 surjouord yons £q uodn paaise eq aeut se 'auo uey) sjuawtuseao8 surowosd asour are aray} aroyas "io iy syuiy} qusurutaacd fuyjouiord ayy se aueduog sunesuen b jo s1o}etip jo prog py} jo sxaquiout oy} jo jequnu yong (f) 'heyeq sip} ut apoads 'ouy} 0} pw wore 'kew syuouus0408 suyoword 10 yuautuseacs supouoad ay} se seare yons ural saanoe sy uo ized ffeys auedwog suyerauey oy, (¢) scheme finally prepared shall be forwarded also to the ment     30 the authority shall, before concurring in any scheme to it under sub-section (1) of section 29, have particular whether or not in its opinion—      matiers to be considered by the authority (g) the scheme conforms to any other technical, economic other criteria laid down by the authority in accordance with 1 national power policy evolved by it in pursuance of the provisi contained in clause (i) of sub-section (1) of section 3 concurrence of authority to scheme submitted to it board or generating com pany, 31 (1) where a scheme is submitted to the authority under s section (1) of section 29, the authority may, having regard to the mat referred to in section 30, either concur in the scheme without modification or require the board or, as the case may be, the generating comany to modify the scheme in such manner as the authority specifies in the requisition so as to ensure that the scheme conforms to the national power policy evolved by the authority in pursuance of the provisions contained in clause (i) of stib-section (1) of section 3 and in either case the authority shall also communicate its decision to the state government or state governments concerned: provided that where the scheme was submitted for concurrence by a generating company in relation to which the central government is the promoting government or one of the promoting governments, the decision shall be communicated also to that government      39 (1)      opera: tion of board's generating stations (2) where a generating company has been established having its activities wholly or partly in a state, the state government may direct the board to make over any generating station established or acquired by the board to the generating company subject to such terms and conditions as may be specified in the direction and board shall comply with such direction: provided that where the central government is the promoting government or one of the promoting gov ments in on to the generating company, no direction shall be made by any state government under this sub-section without the concurrence of the central government e     43 (1)  =   (3) a generating company may, on such terms as may be agreed upon, enter into arrangements for the sale of electricity generated by it— (a) with the board constituted for the state or any of the states wherein such generating company is operating; or (0) with any other person with the consent of the government -or governments which, in relation to that generating company, is the promoting government or promoting governments power to board to enter into arrangements for purchase or sale of electricity under certain conditions     55 (1) every licensee shall comply with such reasonable directions as the board may from time to time give him for the purpose of achieving the maximum of economy and efficiency in the operation of his undertaking or any part thereof (2) if any dispute arises between the board and the licensee as to whether any directions given under sub-section (1) are reasonable or not, it shal] be referred to the authority whose decision thereon shall be final pee  «  75a (1) a generating company shall, before the expiry of the 3lst december of each year, submit to the promoting government, or where 'there are more than one promoting government to all such promoting governments, a report giving an account of the activities, if any, which are likely to be undertaken by such generating company in the ensuing year together with a statement of the estimated capital and revenue receipts and expenditure for that year h form as may be specified hy the promoting government or, as the case may be, the promoting gavernments (2) a generating company shail, as soon as may be after the end of each year, prepare a report giving an account of its activities during the previous year and shall, within six months from the date of closure of the year forward to the promoting government, or where there are more than one promoting government, to all such promoting governments, the report together with a statement of accounts, in such form and containing such particulars as may be specified by the promoting government or the promoting governments, as the case may be, a copy of the balance-sheet and profit and loss account and the auditor's report, in relation to the accounts of the year aforesaid (3) for the purpose of preparing the statement of accounts referred to in sub-section (2), the depreciation to be provided every year shall be calculated in accordance with the same method as laid down by or under this act for calculating depreciation in relation to the board, (8a) (a) the generating company shall carry on its operations under this act and adjust its tariffs so as to ensure that the total revenues in any year of account shall, after meeting all the expenses properly chargeable to revenues including operating, maintenance and management ex- denses, taxes (if any) on income and profits, depreciation and interest payable on all debentures, bonds and loans, leave such surplus as the promoting government or promoting governments, as the case may be, may, from time to time, specify () in specifying the surplus under clause (a), the promoting government or promoting governments, as the case may be, shall have due regard to the availability of amounts accrued by way of depreciation and 'the liability for loan amortization and leave a reasonable amount to contribute towards the cost cf capital works and for payment of dividend on shares (4) the provisions of sub-sections (1) and (2) shall be in addition to and not derogation of the provisions contained in the companies act, 1956, in relation to reports, statement of accounts and other documents required to be prepared or kept or submitted by a company within the meaning of section 3 of that act     licenses to comply with directions, annual reports and accounts of generating company the sixth schedule (see sections 57 and 57a) financial principles and their application      definitionsxvii for the purposes of this schedule—     @) "clear profit" means— the difference between the amount of income and the sum of expenditure plus specific appropriations, made up in each case as follows: - ®    (c) special appropriations sufficient to cover—      (6) "original cost" means in respect of any asset the sum of—   "i  (b) interest charges on capital expenditure incurred, during the period between the date of the grant of the licence and the date when the undertaking commences supply, from borrowed | money and properly attributable to the asset, accrued up to the | date of such commencement of supply at a rate not exceeding the average reserve bank rate ruling at that time plus one per centum;     so however, that the original cost of any asset shall not in any case exceed the original cost attributed thereto in the books of the undertaking     (10) "standard rate" in respect of any year of account means—     (®) in relation to the remaining part of the capital base for that year, the reserve bank rate ruling at the beginning of that year, plus two per centum: provided that the central government may, by notification in the official gazette, and with effect from such date as may be specified therein, increase or decrease the standard rate specified in clause (®), if, after consultation with the authority, that government considers it necessary so to do to ensure that any rise or fall in the reserve bank rate does not affect the reasonable return in any subsequent year of account in relation to that part of the capital base which is equivalent to the capital base as computed on the last date of the previous year of account     