Govt. Issues Supplementary Rules for RoW Compensation in ISTS Transmission Projects

In a move aimed at addressing land acquisition concerns for power infrastructure, the Ministry of Power has issued supplementary rules for determining Right of Way (RoW) compensation for Inter-State Transmission System (ISTS) lines.

The decision comes in response to persistent grievances from landowners regarding inadequate compensation based on outdated circle rates, particularly in urban and semi-urban areas.

The revised guidelines introduce a structured mechanism to ensure that landowners receive fair compensation, aligning with actual market values. This initiative is expected to streamline land acquisition processes, reduce disputes, and accelerate the implementation of crucial transmission projects needed to support India’s growing renewable energy sector.

The issue of RoW compensation has been a long-standing challenge, with landowners in several states raising concerns about compensation calculations being based on official circle rates that do not reflect real market conditions. The central government had earlier issued RoW compensation guidelines on June 14, 2024, which stipulated that compensation be determined using Circle Rates, Guideline Values, or rates prescribed under the Stamp Act.

However, in many cases, these official valuations were significantly lower than actual market prices, leading to disputes and delays in project execution. The problem was particularly prominent in urban areas, where landowners argued that circle rates failed to capture the true commercial or residential development potential of their land. Unlike rural regions, where agricultural activities can often continue under high-voltage transmission lines, urban landowners frequently face zoning restrictions that prevent any meaningful use of their property once transmission infrastructure is installed.

To address these concerns, the government has introduced a district-level mechanism to assess market values and revised the compensation structure based on land-use categories. Under the new framework, a Market Rate Determination Committee (MRC) will be responsible for evaluating the fair market price of land affected by ISTS projects.

This committee will be chaired by the district magistrate or collector, with representation from landowners, the respective transmission service provider, and other relevant stakeholders. The committee will engage two independent valuers with expertise in land assessment, one nominated by the landowners and the other by the transmission service provider. Both valuers must be empanelled with the Insolvency and Bankruptcy Board of India (IBBI) to ensure transparency and professional integrity in the valuation process. If the difference in valuation between the two experts is less than 20 percent, the average of their assessments will be considered. In cases where the difference exceeds 20 percent, a third valuer will be brought in, and the final market rate will be determined based on the two closest valuations.

The revised compensation framework introduces differentiated rates based on the classification of the land. For rural areas, compensation will be set at 30% of the determined market value. In municipal corporations and metropolitan areas, where land prices are significantly higher and restrictions on development more stringent, compensation will be fixed at 60 percent of the market value. In other urban planning areas, such as municipalities and nagar panchayats, compensation will be 45 percent of the market value. This marks a considerable increase in compensation levels, particularly for urban landowners, ensuring that they receive just remuneration for the impact of transmission lines on their properties.

To prevent project delays, the guidelines also empower district authorities to grant construction approvals while the MRC completes its compensation assessment. The committee is required to finalise compensation within one month of receiving a request from the transmission service provider. This provision is intended to balance the interests of landowners with the need to ensure the timely execution of critical infrastructure projects. Given the scale of transmission expansion required to support India’s renewable energy transition, the government has emphasised the need for efficient land acquisition procedures that do not unduly hinder project timelines.

Financially, the new framework allows any additional compensation beyond the standard RoW rates set during the Tariff-Based Competitive Bidding process to be recovered through tariff adjustments. This means that transmission companies can pass on increased costs resulting from higher compensation rates through the Change in Law (CIL) mechanism, subject to regulatory approval by the Central Electricity Regulatory Commission (CERC). By incorporating this provision, the government aims to ensure that transmission infrastructure development remains financially viable while addressing landowners’ demands for fair compensation.

The supplementary rules on RoW compensation mark a significant policy shift that seeks to balance infrastructure development with the rights of landowners. By ensuring higher compensation in urban and semi-urban areas and introducing a structured mechanism for market rate assessments, the government aims to reduce resistance to transmission projects and facilitate their smoother execution.