NTPC may get to allot more power to host states

The country’s largest power producer, NTPC, may soon get to allocate an additional 15% output from its new projects to the home state where the plant is located, a power ministry official said on condition of anonymity. The company can, at present, allocate a maximum of 30% to home states. The move is aimed at providing a level playing field to the state-owned power company that is losing projects to private sector developers which are willing to offer a higher share of power to home states. While NTPC’s allocation of power in most cases is less than 30%, ultra mega power projects being developed by Reliance Power (Sasan) and Tata Power (Mundra) have made higher allocation of 37.5% and 47.5%, respectively, to the home states. The new proposal would allow NTPC to offer up to 45% of the power to a home state, the official said. Power generated at NTPC plants is allocated to different beneficiary states in accordance with the Gadgil formula. As per the formula, the home state gets 10% as preferential allocation, 15% is kept unallocated at the disposal of the Centre and the balance 75% is allocated to beneficiary states, including the home state, on the basis of their energy consumption and central plan allocation during the previous five years. “NTPC has proposed a revision of the existing method of power allocation from its new projects. We are examining the matter to ensure a level playing field for the PSU. Higher power allocation to home states is definitely an issue that needs to be resolved soon,” the power ministry official said. NTPC’s current generation capacity is close to 30,000 mw and it is implementing projects worth 22,000 mw during the Eleventh Plan ending March 31, 2012. The change in allocation formula would help the PSU get greenfield projects from states and secure their cooperation in land acquisition, water linkage and other statutory clearances. “States that have coal reserves are demanding higher allocation and other benefits from prospective project developers. States are unwilling to commit land, water and other statutory clearances for setting power projects if their demands are not met. This is resulting in delays in getting greenfield projects from states,” NTPC chairman & managing director RS Sharma wrote in a letter to power secretary. The PSU has sought the government’s permission to allocate 40-45% power to home states during peak demand shortages. It has said additional allocation could be given from 15% power that could be set aside by the PSU in all future projects.