In what signals a radical shift, the government is keen that power PSUs - especially NTPC - consider setting up power stations as joint ventures (JVs) with states. For the past three decades, the PSUs have been following the Gadgil formula for sharing power with states where they were setting up plants. According to the Gadgil formula, the Centre retained 12 per cent of the capacity to be used at its discretion. Another 10 per cent was allocated to the state where the project is located. From the balance, half was allocated in proportion to the state’s energy consumption, and the remaining half in proportion to the plan assistance received from the Centre.

Almost all of NTPC’s existing super thermal power stations, as well as some of those being planned (the 2,980 mw Sipat power station in Chhattisgarh for instance) followed (or follow) this model. In fact, the power tariff of such plants is so structured that states, which pay the fixed costs, are their notional owners. However, with resource-rich states increasingly asking for a greater share from these regional plants, the Centre now wants PSUs to put more emphasis on setting up plants as joint ventures with states. “The Gadgil formula has run its course; it cannot be the dominant model anymore,” minister of state for power Jairam Ramesh told The Indian Express.

Chhattisgarh, for instance, has been exerting pressure on the Centre to give it a larger share from the Sipat project. The state had cut off water supply to the plant and even demanded a better rehabilitation policy for the affected people. To avoid further delays, the Centre has quietly acceded to one of its demand to give its (the Centre’s) entire share of unallocated power to the state. While some other states in the region that would benefit from the Sipat project — like Maharashtra and Gujarat — are yet to voice their protest, NTPC is facing problems over its new Kahalgaon project (in Bihar), with the local population demanding power directly from the power station. Here too, the Centre does not mind diverting a portion of its share to meet this demand.

... contd.