New power policy gives 50 per cent to ‘home’ states

The union cabinet today approved a proposal by the power ministry that increases the share of host states to 50 per cent in allocation of electricity generated from centrally-owned thermal power plants.

"The proposal is to allocate 50 per cent of the power generated to the 'home' state where the project is located, 35 per cent to the other constituents of the region, and 15 per cent as unallocated power at the disposal of the centre," a government official told the media after the cabinet meeting.

Currently, the allocation of power generated from thermal stations is guided by the Gadgil formula, under which the host state gets 10 per cent preferential allocation, 15 per cent is kept unallocated as the central government's quota, and the remaining 75 per cent is allocated to beneficiary states in the region.

While the central government's quota, used to tide over periods of acute shortages of electricity, has been kept unchanged at 15 per cent, the share of beneficiary states in the region has been brought down to 35 per cent from 75 per cent.

''Currently, in addition to the 10 per cent preferential allocation, a host state also gets its share also from the 75 per cent allocation kept for beneficiary states in the region, making the effective share of the host state as up to 33 per cent. The cabinet reviewed the allocation formula and has today increased it to 50 per cent,'' said the power ministry official.

The government currently considers two factors before deciding the share of a state falling in the region of the host state - percentage of allocation of plan funds and the percentage of power consumption.