The Orissa cabinet today decided to keep the up-valuation of assets of Gridco and Orissa Hydro Power Corporation Ltd (OHPC) in abeyance till 2011-12.
The cabinet meeting chaired by chief minister Naveen Patnaik put its seal of approval on a proposal moved by the state energy department in this regard.
It also approved another proposal for waiver of the clause that the Ultar Mega Power Projects (UMPPs) will have to spend 5 percent of their net profit for the peripheral development, paving the way for setting up of UMPPs in the state.
Briefing the media after the meeting, the chief secretary Tarunkanti Mishra said, the asset valuation of Gridco and OHPC was taken up in 1996 during the power sector reforms.
However, following the Soven Kanoongo committee report, the state government had kept the up-valuation process in abeyance as it was feared that such a move would push up the tariff rate for the electricity consumers.
Energy secretary Pradeep Kumar Jena said, the Orissa Electricity Regulatory Commission (OERC) had suggested the state government in 2006-07 to keep the up-valuation in abeyance till the end of 2011-12.
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The decision of the cabinet will help the state government to reduce the tariff impact on consumers which is estimated to be about 30 paise per unit.
Sources said, though the original valuation of Gridco was Rs 1103 crore, the net increase in valuation was Rs 1120 crore, taking the total value of assets to Rs 2223 crore. Similarly, the assets of OHPC were up-valued by Rs 766.20 crore taking the total asset value of the company to Rs 1246.20 crore. In January this year, the regulatory commission solicited to know the view of the state government on the matter. Responding to the query, the government communicated OERC that the matter of extension of the moratorium period on the upvaluation of the assets up to 2011-12 and other dispensations as stated in the energy department notification of 2003 had been concurred by the state finance department.
Meanwhile, in a bid to remove the hurdles in the way of setting up of Ultra Mega Power Projects (UMPPs) in the state, the cabinet approved a proposal for waiver of the condition that 5 percent of the net profit of the UMPPs need to be spent for peripheral development.
The Union ministry of power, in a recent communication to the chief minister Naveen Patnaik, had requested for waiver of this caluse as the UMPPs would abide by the resettlement and rehabilitation (R&R) plan of the Orissa government.
Sources said, three UMPPs are proposed to be set up in the state with the first unit expected to come up in Bedabahal in Sundergarh district.
Since the state is expected to get about 1300 Mw from the first UMPP, Gridco can gain about Rs 490 crore from power trading. So it will be in a position to spend Rs 38 crore on peripheral development, which was supposed to be collected from the UMPP for this purpose.