The Ministry of Power has introduced new supplementary guidelines requiring Interstate Transmission System (ISTS) developers to pay compensation for the right-of-way (RoW) at 60% of the market value of the land in urban areas. The new rules, which are designed to streamline and expedite the compensation process, aim to resolve the long-standing issues surrounding RoW compensation that have delayed several power transmission projects across the country.The compensation guideline comes as a response to the growing concern over the delays in power evacuation infrastructure growth. According to official reports, 14 ISTS projects have been delayed for months, and in some cases, years, due to disputes regarding compensation amounts.
These delays are largely attributed to landowners demanding compensation rates higher than those determined by state governments, causing significant slowdowns in the development of critical infrastructure.Under the new guidelines, the compensation rates for urban areas have been set at 60% of the land value, while rural areas will see compensation set at 30%. Municipalities and other planning areas such as town panchayats will receive 45% of the market rate. This differentiated approach has been developed to address the unique challenges that urban and semi-urban areas face, where land values are substantially higher than in rural regions.The Ministry of Power’s directive also highlights that in cases where the landowners contest the compensation amount, the market rate for land will be determined by a committee called the Market Rate Committee (MRC). The committee will include the district magistrate or deputy commissioner, a representative from the transmission service provider, and a representative of the landowners. Two valuers, selected from the list of those approved by the Insolvency and Bankruptcy Board of India, will assess the land value and recommend a compensation rate based on their valuations.The new guidelines also aim to tackle the issue of fairness in compensation. It was noted that rural land is often used for agriculture, and its opportunity cost is lower than that of urban land, which incurs higher opportunity costs due to the value of land in commercial use. The compensation rates for urban areas are being adjusted to reflect the higher value and opportunity costs of such lands. This move is expected to ensure a more equitable and transparent compensation process, particularly in urban areas where RoW issues have been more pronounced.
In addition to the new guidelines for compensation, the Ministry of Power has also set a timeline for the resolution of disputes. The transmission service provider is now required to determine the market rate within one month of the application being submitted by the landowner. This is expected to expedite the process and avoid unnecessary delays in critical infrastructure development.Furthermore, the transmission service providers are now responsible for covering the professional fees and charges of the land valuers, which will be included in the RoW compensation costs. This is part of an effort to reduce the burden on landowners and ensure a more efficient process for determining compensation rates.
The guidelines also include provisions for situations where the compensation amounts differ from the rates set out in the project tariffs. In such cases, developers have the option to approach the Central Electricity Regulatory Commission (CERC) to request adjustments based on a change in the law, ensuring that developers are not unduly penalised for adhering to updated compensation rates.As the demand for efficient power transmission infrastructure continues to grow across India, these new RoW compensation guidelines are expected to help reduce delays and improve the speed at which projects are implemented. The Ministry of Power is optimistic that these steps will accelerate the development of the country’s power transmission network, which has often lagged behind the increasing capacity of power generation. By addressing RoW challenges head-on, the new guidelines are set to pave the way for more streamlined and effective transmission projects in the years to come.
With these changes, the government is also aiming to create a more transparent and standardised framework for land valuation, which could have wider implications for other sectors reliant on land acquisition for infrastructure development. In the long run, this could improve the ease of doing business and reduce friction in land acquisition processes across various industries.The new guidelines will be applicable to states that have not yet issued their own market value determination rules, and states are encouraged to adopt these or modify them as necessary to ensure a uniform approach to RoW compensation across the country.