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• Odisha could attract fresh power sector investments worth INR 25,000-30,000 crore over the next six to 12 months after revising its concessional power allocation policy for thermal projects.
• The state plans to reduce the mandatory concessional power supply from 12-14 per cent to 5 per cent, aligning with the Centre’s framework and improving project viability for developers.
• Industry representatives said the earlier policy had pushed investors towards neighbouring states like Chhattisgarh, which attracted over INR 1.5 lakh crore in thermal power investments and added more than 16 GW capacity over the past decade.
• Companies including Jindal Power, Vedanta and Adani Group are now evaluating investment opportunities in Odisha following the proposed policy change.
• The policy revision comes amid rising electricity demand across India and concerns over power shortages, infrastructure gaps and increasing project costs in the thermal power sector.
Odisha is likely to see fresh investments of around INR 25,000-30,000 crore in the power sector over the next six to 12 months after the state decided to revise its policy on concessional power allocation from thermal power plants, according to industry representatives. Advertisement
The state government is preparing to mandate supply of 5 per cent capacity from newly commissioned thermal power plants at variable charges, replacing the earlier framework that required developers to allocate 12-14 per cent capacity at concessional rates for state consumption.
Industry executives said the previous policy had affected investor sentiment despite Odisha having strong advantages for power generation projects, including large coal reserves, port connectivity and availability of skilled manpower.
Inder Keshari, Director General of the Association of Power Producers, said Odisha had all the necessary factors for growth in the power sector, but the higher mandatory allocation of power at variable cost had reduced project viability and discouraged developers from investing in the state.
The earlier allocation norm was introduced during 2008-09 at 14 per cent and was later reduced to 12 per cent for projects with local coal linkage. However, several other states gradually adopted the Central Electricity Authority’s recommendation of a 5 per cent allocation framework, making them more attractive for private investment.
Keshari said neighbouring Chhattisgarh benefited significantly after moving to the 5 per cent structure, attracting investments of over INR 1.5 lakh crore and adding more than 16 GW of thermal power capacity over the past decade. Odisha, in comparison, added less than 4 GW of capacity and received investments below INR 40,000 crore during the same period.
According to the industry body, companies such as Jindal Power, Vedanta and Adani Group are now assessing investment opportunities in Odisha following the proposed policy revision.
The industry body also pointed out that thermal power project costs have increased sharply over the years. Project costs, which earlier stood at around INR 5 crore per MW, have now risen to nearly INR 15 crore per MW. Fixed costs have also increased from nearly INR 1 per unit to around INR 4 per unit.
Due to this increase in capital costs, the tariff impact on other consumers from concessional supply obligations has reportedly gone up to nearly 55 paise per unit from around 14 paise earlier, affecting overall project economics.
Keshari stated that concerns regarding possible revenue losses to the state after shifting to the 5 per cent allocation framework were largely notional. He explained that without fresh investments, there would be limited revenue generation for the state in any case.
He further said that a typical 1,600 MW thermal power project could generate nearly INR 2,000 crore in state GST during construction and approximately INR 100 crore annually during operations, apart from creating employment opportunities and supporting industrial activity.
The policy shift comes at a time when India’s electricity demand has crossed 270 GW amid severe heatwave conditions. Late-night demand has also remained elevated at around 240-250 GW due to increased cooling requirements across regions.
Keshari noted that Odisha has also witnessed power shortages in certain areas as infrastructure expansion and generation capacity have not kept pace with rising industrial demand and cooling loads. The state had even invoked the Essential Services Maintenance Act (ESMA) in parts of the sector to manage the situation.
Industry stakeholders believe the revised policy could improve investor confidence and help Odisha strengthen its position as a major destination for thermal power investments in the coming years.
Source PTI
5th Jun, 2025
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