NEW DELHI: The inadequate availability of quality power being a major hindrance to faster economic growth, Finance Minister P. Chidambaram on Tuesday declared that coal blocks with reserves of 20 billion tonnes would be allocated for power projects so as to ride over the acute shortage of fuel for thermal units.

Presenting the Budget for 2006-07, Mr Chidambaram proposed tax benefits for the five 4,000 MW ultra mega power projects, while announcing a slew of other measures to put the key infrastructure segment on the fast-growth track. These include the setting up of an empowered committee of State chief ministers and power ministers to help in creating an enabling and empowered framework to expedite and implement reforms in the power sector.

Noting that power generation in the current fiscal had so far shown a modest growth of 4.7 per cent owing to shortage of fuel, mainly LNG and coal, Mr Chidambaram said, "the demand-supply mismatch continues. More efforts are required to augment capacity in generation, transmission and distribution."

"Capacity addition alone is not enough, we need deep and durable reforms in transmission and distribution. In order to create an enabling and empowered framework to carry out these reforms, the Prime Minister will constitute an Empowered Committee of State chief ministers and power ministers,'' he said.

Mr. Chidambaram reduced the customs duty on naphtha from 10 per cent to five per cent. Alongside, the tax concessions available to generation and distribution companies have been extended to the ultra mega power projects till March 2010.

Mr Chidambaram said that these five projects, bids for which have already been invited, would be handed over to the prospective developers by December 31 this year. And, to encourage energy efficiency, Mr Chidambaram reduced the excise on compact fluorescent lamps from 16 per cent to eight per cent.

The Minister noted that the capacity addition in generation units was likely to be about 34,000 MW during the Tenth Plan of which about 15,000 MW would be added in 2006-07.

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