Punjab, Haryana oppose fund-block move on power

CHANDIGARH, Feb 21: Haryana and Punjab have opposed the Union Power Ministry's decision to deduct funds from states' share of Central Pla...

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CHANDIGARH, Feb 21: Haryana and Punjab have opposed the Union Power Ministry’s decision to deduct funds from states’ share of Central Plan allocations in the event of default in payment by state power corporations/boards on mega projects. This clause forms a part of the revised policy guidelines for mega projects with a capacity of more than 1,000 megawatt and supplying power to more than one state.

The two states are learnt to have said that the new clause related to devolution was "unacceptable" as it would affect the flow of funds meant for other vital sectors. While the Haryana government has raised objections in a letter to the Union Power Ministry, the Punjab Government expressed their doubts at a recent meeting in New Delhi, according to sources.

In its reply to the Union Power Ministry, the Haryana Government, which is a partner in the inter-regional 3600 MW (600 MW X 6) HIRMA project in Orissa, has also opposed the establishment of a Power Trading Company (PTC) to purchase power from mega projects and sell it to State Electricity Boards (SEBs). It said that the new set-up would only add to the cost at the expense of consumers.

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Haryana Power Department officials said that negotiations for the power purchase agreement (PPA) for HIRMA, which had been going on for nearly 24 months, had reached an advanced stage. The new conditions such as introduction of a new trading company and devolution of funds, at this stage would delay the entire process and increase costs, they added.

However, the Power Ministry has said that the new company – with majority equity participation by Power Grid Corporation of India Ltd along with NTPC, Power Finance Corporation and other financial institutions – would eliminate mega-projects risk regarding payments, thereby bringing down tariff. The devolution clause was proposed by the Union Power Ministry to provide security to the trading company.

The revised policy guidelines are applicable to all inter-state and inter-regional mega projects. In the public sector, the mega projects identified by the Power Ministry and being set up by the National Thermal Power Corporation and Damodar Valley Corporation are: Kahalgaon State II (1500 MW), Morth Karanpura STPP (2000 MW), Maithon Project (1000 MW) and Cheyyur (1500 MW). In the private sector, HIRMA (3600 MW), Cuddalore (1000 MW), Krishnapattanam (1500 MW), Pipavav (2000 MW) and Narmada (1000 MW) are among the projects identified as mega projects.