Govt mulls trading in Centre's unallocated quota of power

In what could be a major blow to power deficit states, the government is examining a proposal to allow trading of its discretionary quota of power totalling to about 6000 Mw.

The central government has a discretionary quota of 15 per cent of the capacity of central power generating stations that have an installed capacity of 40,000 Mw. The government utilises this quota for bridging the demand-supply gap in states facing acute power shortages.

“We have been thinking about the issue of placing 15 per cent unallocated power that is available at the disposal of the Ministry of Power at the disposal of the exchange,” said Union Power Secretary H S Brahma. The proposal is yet to take a concrete shape but if it comes through, states will end up shelling out about two to three times more for procuring power from the central quota.

The power ministry is in favour of it since the central pool will bloat to with 60,000-70,000 Mw coming on stream during the Eleventh Plan period ending 2012. “We will have plenty (of power) in the basket …If not 15 per cent share of the unallocated share, why not give half of it to power exchange to deal in the market,” Brahma added.

Centrally-owned stations have an installed power generating capacity of around 40,000 Mw constituting 27 per cent of the overall 1,50,000 Mw installed capacity in India. Industry experts believe that clearing such a proposal would not be easy, owing to the political opposition and will attract regulatory hurdles in its implementation.

“The proposal would not be acceptable to states as it is inflationary in nature. This power (from central quota) essentially belongs to the states as it comes from plants which are funded by the tariff paid by states. Also, the tariff for sale of power from central stations is regulated by the Central Electricity Regulatory Commission (CERC). The government cannot ask this power to be sold at market price,” said a senior analyst from an accounting and consultancy firm. The allocation of power from the centrally-owned plants is governed by the Gadgil formula, which earmarks a certain share of power produced from such plants for consumption within the state.

“Its a very difficult proposal. It would cause major political hue and cry especially since parliament is in session. I think the government would not be able to do it,” said a senior government official close to the development.