BHUBANESWAR: Odisha may attract investments worth Rs 25,000-Rs 30,000 crore in the power sector over the next six to 12 months after the state decided to align its concessional power allocation policy with the Centre’s framework, an industry body official said.
The state government is set to mandate supply of 5 per cent capacity from newly-commissioned thermal power plants at variable charges, replacing the earlier policy requiring developers to allocate 12-14 per cent capacity at concessional rates for state consumption.
Industry representatives said the earlier policy had discouraged fresh investments despite Odisha’s abundant coal reserves, strategic port access and availability of skilled manpower.
Director general of the Association of Power Producers Inder Keshari said Odisha has all the enabling factors for power sector growth, including raw material availability, ports, a growing economy and skilled manpower. However, the higher mandatory allocation of power at variable cost had adversely impacted project viability and deterred developers.
He said while Odisha retained the 14 per cent allocation norm introduced in 2008-09 and later reduced it to 12 per cent for projects with local coal linkage, several states adopted the Central Electricity Authority’s recommendation of a 5 per cent allocation framework.
“In contrast, Chhattisgarh’s shift to a 5 per cent quota facilitated investments of over Rs 1.5 lakh crore and capacity addition of more than 16 GW. Odisha, by comparison, has seen less than 4 GW of capacity addition, translating into investments below Rs 40,000 crore,” Keshari said.
Companies such as Jindal Power, Vedanta and Adani Group are now evaluating investment opportunities in Odisha, he added.
Keshari said thermal power project costs have risen sharply from around Rs 5 crore per MW earlier to nearly Rs 15 crore per MW now. Consequently, fixed costs have increased from approximately Rs 1 per unit to around Rs 4 per unit.
Under the earlier framework, concessional supply obligations had a tariff impact of around 14 paise per unit for other consumers. However, at current capital costs, the impact has risen to nearly 55 paise per unit, affecting project viability, he said.
Highlighting the broader economic benefits, Keshari said a typical 1,600 MW thermal power project could generate nearly Rs 2,000 crore in SGST during construction and about Rs 100 crore annually during operations besides creating employment opportunities.
“The revised policy framework is expected to significantly improve investor sentiment and strengthen Odisha’s position as a major destination for power sector investments,” he added.
