Page 51 - Policy Economic Report - March 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Key features of the amendments

1. Clearly Defined Ownership Requirements

The definition of ownership has been clarified to include subsidiaries, holding companies and other
subsidiaries of the holding company of the entity that establishes the captive generating plant. This
clarification recognises modern corporate structures where power assets are often developed through
group entities or special purpose vehicles. The amendment ensures that legitimate captive investments
by corporate groups are not denied captive status merely due to organisational structuring.

2. Uniform Verification Period

Verification of captive status will be undertaken for the entire financial year, ensuring clarity and
uniformity in implementation. In cases involving the first or last year of ownership of a captive
generating plant, verification may be undertaken for the relevant part of the financial year.

3. Captive Plants established by Association of Persons (AoP)

The amendments provide greater flexibility in operation of group captive projects established through
an Association of Persons (AoP). Captive users will be able to draw power based on their operational
requirements, subject to overall compliance with the statutory ownership and consumption conditions.

Consumption exceeding the proportionate entitlement of an individual user will not result in
disqualification of captive status for the plant. However, such excess consumption will not qualify as
individual captive consumption but will still count towards the collective captive consumption qualifying
requirement of the group.

Where a member of the AoP holds 26 percent or more ownership, the proportionate consumption
requirement will not apply to that entity and its entire consumption will be treated as captive
consumption.

For the purpose of proportionate consumption calculation, a captive user together with its subsidiaries,
holding company and other subsidiaries of the holding company will be treated as a single person.

4. Nodal Agencies for Captive Status Verification

With effect from 1st April,2026 the State or Union Territory Governments may designate a nodal
agency for verification of captive status in cases of intra-state captive consumption. For inter-state
captive consumption, verification will be undertaken by the National Load Despatch Centre (NLDC).

A Grievance Redressal Committee will be constituted by the Appropriate Government to address
disputes arising from such verification decisions.

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