Odisha renews bid for 25% free power from thermal plants

Also demands 33% free power from plants based on coal washery rejects

The Odisha government has made a renewed bid for its demand of 25 per cent free power from coal-based thermal power plants and 33 per cent free power from plants based on coal-washery rejects.

The state has also demanded a cess on power exported to other states and a tax on power generated in the state.

“We have made a fresh plea to the Union government to consider our plea for free power. The Energy and Resources Institute (Teri) has submitted a report to the government of India on policy initiatives for equitable sharing of cost and benefits from coal and thermal power generation activities. We have urged the Union power ministry to decide expeditiously on the issue,” said a government official.

Teri’s report has calculated the uncompensated externalities, excluding the impact of health cost and carbon cost, at 26.5 per cent of the levelised tariff. Based on the demand of the Odisha government, Teri was roped in to study policy initiatives and submit a report for equitable sharing of cost and benefits from coal and thermal power generation activities.

To exploit its coal deposits and ensure energy security, the state government signed a  memorandum of understanding (MoU) with 28 independent power producers (IPPs) envisaging a combined generation capacity of 37,000 Mw. Two ultra mega power plants (UMPPs), each with capacity of 4,000 Mw, are coming up in the state. Besides, maharatna PSU, NTPC Ltd, has lined up two super-thermal power projects at Darlipalli (Sundargarh) and Gajamara (Dhenkanal), each with capacity of 1,600 Mw.

But, on operationalisation of all these thermal power plants, the state may have to face negative externalities like loss of prime forest and vital eco system and lead to pollution of major rivers, air pollution, consequential health hazards, problems of resettlement and rehabilitation which are not being compensated by the existing system of payment of royalty.

Since 2010, the state government has been demanding 25 per cent free power from coal-based thermal stations and 33 per cent free power from coal-washery reject-based power plants.

Justifying its demand for free power, the Odisha government had pointed out that while states consuming the power and coal from the host-state get benefited, the host state gets a nominal advantage of limited employment opportunity and also a very low royalty on coal. Both coal mining and power generation being in the manufacturing sector, hardly any ancillary industry gets developed around these activities. The above situation leads to an inequitable sharing of cost and benefits from coal mining and power generation. The demand for free power was stiffly opposed by the IPPs who argued that the condition of supply of free power will make the power projects unviable.