Odisha’s demand for free power from thermal plants has no statutory basis: TERI

Reported by Chinmaya Dehury/Edited by Swetaparna Mohanty

Bhubaneswar, Sep 12

The Energy Resources Institute (TERI) dealing with sustainable use of finite resources has said the Odisha government’s demand for free power from thermal power plants and energy stations based on coal washery rejects has no statutory basis.

“In TERI’s view, at present, the state’s demand for free power from thermal power stations has no statutory basis. In some states, free power or power at variable cost is one of the conditions in memorandums of understanding (MoUs) signed with power developers. Thus, it is being introduced not as a statutory obligation or a fiscal measure, but can be a contractual provision between the parties involved,” said a recent report of TERI addressed to the Odisha government.

“As long as the states seek power at variable cost or free of cost from all the power plants, it is justifiable. However, any policy that mandates free power from only those plants that are selling/exporting power to other states can be challenged in the court of law as imposing restrictions on freedom of trade, commerce, intercourse among states,” said the report.

The Planning Commission had commissioned TERI, a Delhi based organisation, to conduct a study on the issue after Odisha and some other coal bearing states pitched for free power from coal-based power plants coming up in their respective states.

It may be noted that Odisha had demanded 25 per cent free power from coal-based power plants and 33 per cent free power from power plants based on coal washery rejects.

The demand was also stiffly opposed by the independent power producers (IPPs) who argued that the condition of supply of free power will make the power projects unviable.

A team of TERI had recently visited Odisha for a study on equitable sharing of benefits arising from coal mining and power generation among resource rich states. The objective of the study was also to examine the impact of allowing free power at variable cost from coal based plants in the host state.

TERI had sought information from the state government on various facets of the power sector like capacity of coal-based power plants, state share of power from these units, cess (if any) levied on the generators, current rate of electricity duty on consumption and tariff at which electricity is supplied from the power plants.