The Centre has approved a policy for allocation of electricity from new thermal power projects being set up by public sector firms such as NTPC Ltd. Under this, the companies will have to allocate a much higher share of electricity to States where future plants are located.
The new policy, cleared by the Union Cabinet on Thursday, earmarks 50 per cent of the electricity generated from these stations to the home State for 10 years starting April 2012, up from a maximum of just over 30 per cent currently.
The move will come as a big boost to the coal-bearing States of Orissa, Chhattisgarh, Madhya Pradesh and Jharkhand, where a number of projects are slated to come up in the near future.
The Government move is in line with NTPC's demand to get higher allocation for home States, citing it as an incentive to motivate the States to allocate land an water and secure their cooperation in bagging other statutory clearances.
At present, power is allocated under the Gadgil formula, which offers 10 per cent power as preferential allocation to home State, and reserves 75 per cent for constituent States in that region (including the home State) with the balance 15 per cent remaining unallocated and retained at the Centre's disposal. Under the current formula, the allocation for the home State can go up to a maximum of 33 per cent.
The new proposal will straightaway impact the allocation of power from 14 NTPC projects, most of which are in Madhya Pradesh and Orissa. For instance, NTPC's proposed 3,960-MW Barethi project in the Bundelkhand region of Madhya Pradesh will be allocating 50 per cent of power from the project to the Home State, with the remaining power, besides the Centre's unallocated quota, being earmarked for Uttar Pradesh. Under the Gadgil formula, the share of Madhya Pradesh would not have been more than a third of the total generated power at the maximum.
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