Power Sector Reforms in Uttar Pradesh

Electricity has become the lifeblood of the modern world, without which the world will come to a virtual standstill. Any sluggishness in the growth of the power sector can throw the region far behind other regions in industrial, economic and social growth. Thus, power has been recognized as one of the key components of infrastructure for a sustained growth of the state economy. Full utilization of other input factors, such as manpower, land including irrigation and capital-related resources heavily depends upon the uninterrupted availability of electricity. Electricity has therefore, become the most essential factor in improving the social conditions and welfare of people.

Over a period of time, energy supply could not have matched with the need of industrial requirement. The major problems faced worldwide are fast depletion of non-renewable energy sources, increasing costs for energy, and inability to create sufficient returns for investment for growth. These problems have created a shortage of power in both quantity and quality. Power sector was mainly treated as a Government business worldwide, considering its importance as a vital infrastructure for the growth of the state. But growth in this sector, however impressive it was, looked insufficient to cope with the impulsive growth in industrial and other sectors.

In UP’s perspective, there had been no substantial augmentation in the state power generation capacity till the 1990s. Power has been the bane of UP’s industry, with the current demand-supply gap widening to almost 3,000 MW. The current demand in the state is estimated at 10,000 MW.

Taking it as a cue, the Government of UP has formulated UP Power Energy Policy 2009 for increasing the role of public private partnership in generation, transmission and distribution, in addition to the work already being carried out under State sector. The Government is slowly but surely inching ahead towards the development of Power sector with the help of private sector through Public Private Partnerships (PPPs), joint ventures, memoranda of understanding and co-generation by sugar mills.

The Government has envisioned to meet out the power demand across the state by the year 2014, and to increase the annual per capita consumption power up to 1000 units, by 2017.  The Government has taken many pro-active measures in Generation, Transmission and Distribution sectors.

GENERATION

During 11th Five year plan, many initiatives have been taken, which include: 

• Power plants of 600 MW in Rosa and 600 MW in Anpara 'C' (Unit-I) have already been commissioned
• Several other Power plants of the aggregate of 2430 MW are scheduled to be commissioned by March 2012 which include
• 2 x 250 MW Harduaganj Extension under state sector
• 2 x 250 MW Parichha Extension under state sector
• First 500 MW unit of Anpara ‘D” under state sector
• 1 x 600 MW Anapara ‘C’ Thermal Extension (Unit-II) under private sector
• 4 x 82.5 MW Shri Nagar Hydro under private sector
• Power plant of 450 MW co-generation in sugar mills is being commissioned under private sector.

• The work for 3x660 MW Bara Thermal Power Project and 2x660 MW Karchhana Thermal Power Project have been entrusted to private developers under case-2 competitive bidding guidelines of GOI. Work is under progress in Bara Thermal Power Project. Work for Karchhana Thermal Power Project is yet to be started.
• The work for 2x660 MW Meja Thermal Power Project (Allahabad) is also underway in Joint Sector with NTPC and UP Rajya Vidyut Utpadan Nigam Ltd 

By the end of 11th Five Year Plan, it is hoped that the state would get 1500 MW from the state-run projects, 2130 MW from the private sector, 450 MW from MOU route projects and 1242 MW from various projects being implemented by the central agencies.

Under 12th Five year plan (April 2012 - March 2017), the Government of U.P. has planned more than 25000 MW capacity additions. This envisages capacity addition of 6870 MW under State/Joint sector, 5300 MW under Case-2 Projects, 13580 MW under MOU Route, 2756 MW under Case-1, where LOA has been issued and 2000 MW under Case-1, where competitive bidding process is in progress, by which power can be supplied from any power project located in any State of the country.

As on date, bid process for 2x660 MW Jawaharpur Thermal Power Project has already been initiated and RFP has been issued to 17 qualified bidders.  RFQ process for 3x660 MW Dopaha Thermal Power Project has also been started. The selection of Technical Consultant for 2000 MW Yamuna Expressway Thermal Power is also under process. Department will provide land, coal linkage, water linkage and environmental clearance to the developer and power will be purchased on levelised tariff through competitive bidding.

Further, Government of U.P. has signed 13 nos. of MOU(s) for 14030 MW for different projects with the developers mainly M/s Bajaj Hindustan Ltd., M/s Himawat Power Pvt. Ltd., M/s Lanco Anpara Power Ltd., M/s NTPC & with M/s THDC.     

           

TRANSMISSION

At present UP has a transmission network to cater more than 10000 MW of power. To cater the enhanced generation by the end of 11th plan, UP transmission system is being augmented to evacuate 15000 MW of power. Accordingly, transmission development programme has been worked out and number of 765 KV/ 400 KV/ 220 KV/ 132 KV sub-stations and associated transmission lines are under construction.

These include sub-stations of 765 KV (3 in numbers), 400 KV (9 in numbers) along with associated transmission lines under public private partnership model for evacuation of power from 3x660 MW Bara, 2x660 MW Karchhana and 3x660 MW Meja Thermal Power Projects.  In this backdrop, developers have already been selected viz. M/s. Isolux Corsan for package-1 and M/s. Cobra Instalaciones for package-2.  Letter of Intent has been issued for package-2, whereas the same is being issued for package-1. Both the packages would involve investment of approximately Rs.10,000 crores.

Apart from above, sub-stations of 765 KV (2 in numbers), 400 KV (3 in numbers), 220 KV (25 in numbers) and 132 KV (70 in numbers) are to be constructed under State sector.

DISTRIBUTION

In order to improve the performance of the power sector, and for bringing financial and operational independence, besides creating conditions for competitive and self sustainable developments of the power sector, Government of India has enacted “Electricity Act 2003” with effect from June 2003. Govt. of UP has had undertaken an input-based franchisee distribution model in cities like Agra and Kanpur for economizing on power. While the distribution system in Agra has already been handed over to a private partner M/s Torrent Power Ltd. with effect from 01.04.2010, things are moving in a similar direction for Kanpur. The process would soon be rolled out in nine other towns. This will ensure more power supply in quality as well as in quantity.

With an aim to attract more and more companies to participate in open bid for the selection of input based franchisee, UPPCL will provide the following facilities to the prospective distribution franchisee :- 

• Distribution franchisee can use utilities distribution assets
• Distribution franchisee can utilize other services of utilities such as testing facility of HT/LT between switching / sub-stations and distribution transformer and/or other technical assets.
• Utility shall provide inventory of first three months
• Utility shall ensure the supply of power to the distribution franchisee
• Utility shall allow distribution franchise to purchase power through open access.

To augment distribution system, 360 numbers of new 33/11 KV sub-station are under construction and 150 numbers are under sanction process.

It is certainly not the end here, the Government is mulling all available options and relentlessly striving hard in making U.P. a power surplus state, to create an industry friendly ambience so as to compete in true sense with all the peer states across the country and also enshrine U.P. among the most developed states within the country and globally as well. The mission may seem difficult but is surely not impossible once the people of the state from all walks of life shall also be determined and join their hands to bolster every initiative taken by the Government for the better future prospects of the state so that the benefits of development may reach the doorsteps of every citizen of U.P.

N.C. Gupta

Dy. Manager (Fin.)

Udyog bandhu

New Land Acquisition Policy of Govt. of U.P. – A step forward in socio-economic development in the state

With an aim to protect the interest of land-owners and to provide them adequate compensation and other facilities in the event of acquisition of their land for the use of social and economic development projects across the state, the Govt. of U.P. has come out with a new land acquisition policy, after having threadbare discussions with the farmers and their agreement during the Kisan Panchayat held recently.  The new policy has come into effect on 2^nd June, 2011.  A G.O. no. 632/1-13-11-20(29)2004 dated 02.06.2011 has been issued.

The new policy offers a much better compensation package than what was proposed in the earlier acquisition policy. The policy establishes final say to remain with the land-owners. Not only has the land-owner been empowered to seek a better price for his land through negotiations, he has also been given a choice to decide how he wishes to accept compensation, depending on his needs, his holding capacity and nature of project.

The salient features of the new policy are enunciated hereunder:

• In acquisition of land for all purposes, the land shall be purchased directly from the land-owners at mutually agreed terms between the land-owners and the acquisition bodies in consonance with relevant rules/orders relating to the purchase of land.
• Under the policy, the land acquisition has been divided into three parts;
• For infrastructure projects in public sector such as highways, canal and power etc.
• For planned industrial/urban development projects in public sector such as developed land, for residential needs of general public, for units in service sector or for small industrial units and other public utilities.
• For planned industrial/urban development projects in private sector, outside the master plan area for public use such as housing, commercial-medium or heavy industry, service sector and infrastructure or for allotment of land in bulk to public sector.
• The land acquisition, for infrastructure projects in public sector, shall be made under the provisions and process of Land Acquisition Act, 1894 but the compensation of land would be determined as per Karar Niyamawali, 1997. Affected land-owners would be given all the benefits admissible under Rehabilitation & Resettlement Policy 2010 (as amended) of the State Government.
• The land acquisition, for planned industrial/urban development projects in public sector, shall be made under the provisions and process of Land Acquisition Act, 1894 and after issue of notification under section-4, the following options would be available to the land- owners :
• Compensation amount would be determined by the acquiring authority. The affected land-owners would also be given all the benefits admissible under Rehabilitation & Resettlement Policy 2010 (as amended) of the Government.

OR

• 16% of the total acquired land in developed form, free of cost. This land would be transferable. Out of this, 50% shall be for residential use and 50% for non-residential use, such as industrial, institutional, commercial or mixed use. The policy determining corresponding percentage of non-residential use of land shall be framed by the acquiring authority itself. Further, the land will be exempted from development charge or land use change charges.
• The affected land-owner can choose to retain some portion of developed land and part with balance portion of land by receiving compensation at the rate declared by the acquiring authority before the commencement of the project on mutually agreed terms.
• Affected land-owner becoming landless shall be provided a developed residential land of the size of 40 sq. mtr. free of cost.
• Besides, the following benefits shall also be admissible to the land-owners:

1. Annual annuity of Rs.23,000/- per acre for 33 years, which would be increased annually at a fixed rate of Rs.800/- per acre.
2. If a land-owner does not want to avail annuity on an annual basis, he will be provided a one-time rehabilitation grant at the rate of Rs.2.76 lakhs per acre.
3. In the event of land acquisition for the use of company, the affected land- owner shall have an option to buy shares of the company of the value equivalent to 25% of one-time amount of rehabilitation grant. Such shares shall be allotted at the market value prevailing on the date of publication of notification under section-6 of the Land Acquisition Act or date of agreement, whichever is later.  If the company issues Initial Public Offer of shares after the date of land acquisition, the allotment of shares to opting land-owner shall be made at face value of the share equivalent to 25% of one-time amount of rehabilitation grant. 
4. The affected land-owners, who have agricultural land and whose entire land has been acquired, will be compensated for their livelihood with one-time financial assistance of the amount equivalent to minimum agricultural wages of 5 years.
5. The affected-land owners, who have agricultural land and whose entire land has not been acquired but have become marginal farmers, will be provided one-time financial assistance of the amount equivalent to minimum agricultural wages of 500 days.
6. The affected land-owners, who have agricultural land and eventually have become small farmers, will be provided one-time financial assistance of the amount equivalent to minimum agricultural wages of 375 days.
7. Each of the agriculture or non-agriculture labour families, in the project affected area, will be provided one-time financial assistance of the amount equivalent to minimum agricultural wages of 625 days.
8. Each of the displaced families, in the project affected area, will additionally be compensated for their livelihood with one-time financial assistance of the amount equivalent to minimum agricultural wages of 250 days.
9. Owners of the hereditary land in the record of Industrial Development Authorities shall continue to get additional facilities in accordance with prevailing practice.

• The land acquisition, for planned industrial/urban development projects in private sector, shall be made under the following process; 
• After due examination of the project, the notification shall be issued for entire land of the project under section-4 of Land Acquisition Act, 1894.
• The compensation package shall be prepared by the developer on mutually agreed terms with the land-owners at the village level itself, where the concerned District Magistrate shall play the role of facilitator and in place of acquisition, the land shall be transferred to project developer directly from land-owner.
• This package shall be finalized only after obtaining the consent of at-least 80% of the land-owners.
• The following options would be available to the land-owners:
• 16% of the total acquired land in developed form, free of cost. Such land would be transferable. Out of such developed land to be given to the land-owner, 50% shall be for residential use and 50% for non-residential use, such as industrial, institutional, commercial or mixed use. The policy determining corresponding percentage of non-residential use of land shall be framed by the acquiring authority itself.

OR

• Out of the 16% of the developed land, the affected land-owner can choose to retain some portion of developed land and part with balance portion of land by receiving compensation at the rate declared by the acquiring authority before the commencement of the project on mutually agreed terms. In the absence of authority in the project affected area, the rates of compensation for infrastructure projects shall be declared by District Magistrate. Out of such developed land to be given to the land-owner, 50% shall be for residential use and 50% for non-residential use, such as industrial, institutional, commercial or mixed use. The policy determining corresponding percentage of non-residential use of land shall be framed by the acquiring authority itself. Further, the land will be exempted from development charge or land use change charges.
• One member of each of the families becoming landless shall be provided a job according to his qualification in the developer company.
• Besides, the land-owners will also be entitled to avail the benefits as explained above at point no. 1 to 9 in case of acquisition of land for planned industrial/ urban development projects in public sector.
• The land of the remaining farmers, who do not agree for the above package, shall be acquired under the process of Land Acquisition Act, 1894.
• If less than 80% land-owners of the project affected area give their consent, then the project will be reconsidered. 

• Developer of the project will also construct a Kisan Community Centre and a Model School up to class 8 for providing educational opportunity to the wards of BPL families in every project affected village.
• The developed land to be given to the land-owners as compensation shall be free from stamp duty on registration and registration fee.
• If a land-owner buys land anywhere in the state from the land compensation amount so awarded within one year, he will be exempted to make payments towards stamp duty and registration fee.

Thus, the ultimate goal of this policy is to enable land owners to share the prosperity ushered in the state on account of implementation of development projects.

N.C. Gupta
Dy. Manager (Fin.)
Udyog Bandhu