New Delhi: After it was censured by a parliamentary committee, the government has decided to rework the formula for sharing power generated by so-called ultra mega power projects (UMPPs), each with a capacity of 4,000MW, that are yet to be awarded.
The current formula, also called the Gadgil formula, is based on the quantum of the investment made by the Centre and various states. The new formula will be based on the needs of various states, their ability to pay, and the viability of the project itself. This will address the concerns of states such as Chhattisgarh, which have not been allotted any power from these projects.
A power ministry official, who did not want to be identified, said the new formula would apply to “the new UMPPs which are yet to be awarded” except the one at Tilaya at Jharkhand.
The official added the formula was something “the power ministry wanted.”
The government’s decision to change the formula comes after the parliamentary standing committee on energy questioned the manner in which power from UMPPs already cleared had been allocated. A parliamentary standing committee comprises members of Parliament; some of these look into the functioning of individual ministries.
“The Gadgil formula is based more on economic parameters than that on the current needs of the power sector,” said Shubhranshu Patnaik, an executive director at audit firm PricewaterhouseCoopers.
Each of these UMPPs require an investment of Rs16,000- Rs20,000 crore. The government originally planned 10 UMPPs across the country. While the projects at Mundra in Gujarat, Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh have been awarded, those at Tilaiya in Jharkhand, Cuddalore and Marakkanam in Tamil Nadu, and Jharsuguda in Orissa are yet to be assigned.
“The Central Electricity Authority (CEA) has been asked for its inputs. However, it will be made sure that the new formula will not be used to corner the maximum power and then use it to trade,” another government official, who did not want to be identified, said.
According to the UMPP model, power generated from these projects will be used only for the internal needs of the procurer states and not for inter-state trading.
“Since the Centre is handling the project, deciding on a new formula is the Union government’s prerogative. However, this new formula will have to be evolved through a consensus with the states. In the long run, the answer is to have as many UMPPs as possible so that the states do not have any grievances,” Patnaik added.