The key strengths of the Project are highlighted below:
(a)ONGC’s sponsorship lends enviable strength to the project
ONGC is one of the largest and financially strongest companies in the country with proven experience in developing, implementing and operating extremely large sized infrastructure facilities spanning the entire country. ONGC owns significant gas reserves and already has substantial production facilities and transportation network in the state of Tripura which would facilitate expeditious implementation of the project.
(b) Support by Govt. of Tripura
GoT considers the installation, commissioning and continued operation of the Project to be of significant importance to the state of Tripura and for this purpose it has extended its support by providing tax and other fiscal benefits to the Project, such as (i) assistance in obtaining clearances/ statutory approvals, (ii) providing land at nominal rates, (iii) exemption from sales tax / VAT on the gas supplied by ONGC, (iv) external infrastructure for smooth transportation of equipments and heavy machinery, (v) water supply at nominal rates, all adding to making the tariff competitive.
(c) IL&FS’ Project Development role ensures robust project structure
IL&FS is a leading infrastructure development and financial services institution in the country with a successful track record in development of infrastructure projects. IEDCL, the power project development arm of IL&FS, as project development advisor adds significant credibility to the project development process.
(d) Project Contractual Structure mitigates key implementation risks
The project contractual structure entails extensive technical studies by renowned agencies followed by implementation through a turnkey EPC contracting route on a fixed time basis. In addition, the project implementation will be monitored by independent technical agencies.
(e) Gas Supply by ONGC on firm price basis places the project in a unique position vis-à-vis competing projects
The project is uniquely placed vis-à-vis other gas based projects in the country by virtue of the operator of the gas fields being the main project promoter. ONGC has committed long- term gas supply linkage to the Project from its existing gas fields in the vicinity of the Project at firm prices unlike all new gas based projects which have to depend on crude linked LNG or on short term (1-5 year) natural gas contracts.
(f) Significant progress made on the project limits project risks
Land acquisition for the project has already been completed. No rehabilitation is involved in the project. Key clearances have already been obtained. Technical studies for the project have been completed by reputed agencies. Given the background of activities completed till date, several risks relating to project start-up get adequately mitigated.
(g) Tax incentives
The project will be eligible for income tax holiday under Section 80(IA). Under this provision the company can avail a tax holiday for a period of 10 years in a block of 15 years.
By virtue of obtaining Mega Power Status under the Mega Power Policy of GoI, the project will be eligible for certain fiscal incentives such as exemption from customs duty. The price bids submitted by M/s BHEL has accounted for the savings resulting from the Mega Power Status accorded to the project in its bid.
These exemptions help in reduction of tariff and ensure project competitiveness in the long run.
(h) Mitigation of Regulatory Risks
OTPC has applied for all the major approvals and obtained most of the necessary clearances from the authorities. The obtention of these approvals and clearances allows foe a smooth execution of the project.