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State flouts norms by acquiring land for Indiabulls’ power plant

Currently facing farmers’ firewall over land acquisition for the 1320-MW Mansa plant of Indiabulls,the Punjab government seems to be flouting the very policy it formed to allow power projects through the memorandum of understanding (MoU) route.

Written by Sukhdeep Kaur | Chandigarh |
August 30, 2011 1:12:14 am

Currently facing farmers’ firewall over land acquisition for the 1320-MW Mansa plant of Indiabulls,the Punjab government seems to be flouting the very policy it formed to allow power projects through the memorandum of understanding (MoU) route.

Clause 10 of the Punjab Power Generation Policy 2010 — which lays down the implementation methodology — clearly mandates that the developer after signing the MoU with the Punjab State Power Corporation Limited,will also take the approval of the appropriate regulatory commission (Clause 10.3). Moreover,in the sequence cited by Clause 10,the regulator’s nod has to come before the developer proceeds to get land acquisition and other approvals from various government agencies (Clause 10.4 and 10.5).

However,a year after it signed the MoU with the power corporation,Indiabulls is yet to file a petition before the Punjab State Electricity Regulatory Commission (PSERC). When contacted,PSERC officials said there has been no official reference on the MoU from the government,power corporation or the developer. “According to the power generation policy,the onus of getting all approvals,including that from the regulatory commission is on the developer,” Power Secretary Anirudh Tiwari said.

\But Indiabulls contends that the policy does not make it binding to obtain the regulator’s concurrence after the MoU stage. “It says approval of the regulatory commission,as required,shall be obtained after signing the MoU. According to the MoU signed by us with the government,the PSERC’s nod is not required till signing of power purchase agreement with the Punjab State Power Corporation. Moreover,Clause 10 does not state that the various points have to be followed in that sequence. We will seek the commission’s nod but when required under the MoU,” said Kubeir Khera,vice-president (media relations),Indiabulls.

But the very first line of the said MoU between Indiabulls and the power corporation states that it will be governed by the 2010 Power Policy. “Not only is the policy itself flawed and contradictory to the Central Electricity Regulatory Commission (CERC) guidelines,which categorically state that competitive bidding route should be adopted for setting up power plants as it results in lower tariffs and therefore is in the interest of consumers,the government is contradicting its own policy by executing the MoU without getting the approval of the PSERC,” said All India Engineers Association president Padamjit Singh.

He added that the regulator’s approval is all the more crucial,as it has to ultimately decide the tariff. “In case of MoUs,there are absolutely no bonafides. Unlike competitive bidding,tariff in this case is based on cost plus approach and the regulator would have to verify cost of each and every input to find if it is inflated,” he said.

R V Sahai,former Union power secretary,said it is precisely on account of lack of transparency that the MoU route has been discontinued by most states. “Since January 2011,even state-owned power corporations such as NTPC are not allowed to come through the MoU route. The reasons are mainly two — the tariffs are comparatively higher and it also invited criticism for having no transparency,” said Sahai.

Unlike Gujarat,no cheap land in Punjab: PSERC

The PSERC too had categorically objected to the new generation policy. The PSERC secretary,in a letter to the principal secretary (Power) on September 17,2010,had stated: “The Gujarat policy formed the basis of the draft generation policy but Gujarat is reasonably comfortable in power availability,has fuel resources and relatively cheap land. Keeping in mind the fact that such plants will be selling a large portion of the total power generated by them outside the state in that case,consumers in Punjab would be bearing the cost of augmenting the transmission network that will facilitate the export of power generated by any such plant.” It added that the generation policy needs to ponder over the grant or precedence in allocation of resources (including land) to competitively bid/state sector projects from which state and its consumers draw greater advantage.

What central panel says:

All the future requirement of power (in a state) should be procured competitively by distribution of licensees except in the cases of expansion of existing projects….

Even for the public sector projects,tariff of all the new generation projects should be decided on the basis of competitive bidding.

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