Supplementary RoW Compensation Guidelines for Transmission Lines

(Parveen Arora and Ishaan Chopra)

The Ministry of Power (“MoP”) recently issued supplementary guidelines on March 21, 2025, for determining the payment of compensation regarding the right of way (“RoW”) for transmission lines under Section 67 (Provision as to opening up of streets, railways, etc.) and Section 68 (Overhead Lines) of the Electricity Act, 2003, in conjunction with provisions under the Indian Telegraph Act, 1885 (“Supplementary Guidelines”).

The compensation under the Supplementary Guidelines is in addition to the compensation for normal crop and tree damages and supplementing the revised RoW compensation guidelines for transmission lines (“RoW Guidelines”) dated June 14, 2024, which are covered in our previous article here. 

What’s New?

Until a few years ago, there used to be a huge gap between power demand and generation; however, this gap has narrowed significantly. Despite this progress, DISCOMs are unable to supply power to every corner of the nation due to a lack of robust power evacuation infrastructure evenly distributed across the country. Moreover, the infrastructure growth in India lags behind with the increase of power capacity additions due to several unique challenges faced by transmission projects. One such significant challenge is the Right-of-Way (RoW) issue, which is encountered by nearly every entity, whether in distribution, transmission, or IPP. RoW challenges primarily arise from demands for higher compensation compared to rates set by state government authorities. While this may seem straightforward, these challenges can significantly impact project completion timelines, with delays in project execution that can extend into several months and even years in certain cases, along with increased costs.

Last year, the revised RoW Guidelines introduced a structured compensation calculation method to ensure landowners receive fair compensation, aligning with actual market values. It aimed to bring uniformity across various projects and regions. While it was indeed a progressive step, it had some shortcomings. To address these, the MoP introduced Supplementary Guidelines to bridge gaps in the existing framework, particularly in urban and semi-urban areas.

To calculate the compensation, the RoW Guidelines consider circle rates or stamp duty values, which often fail to reflect actual market rates, disproportionately harming landowners in urban and semi-urban areas. Unlike rural areas, where agricultural use remains feasible even after transmission lines are installed, urban landowners face irreversible restrictions on land development due to changes in land use, leading to higher opportunity costs. Additionally, many states still lack a standardized methodology for assessing market rates, leaving authorities without clear directives to resolve disputes. This ambiguity has resulted in widespread complaints of undervaluation and unfair compensation.

The  Supplementary Guidelines address the aforementioned disparities by mandating market-linked valuations. This ensures that compensation aligns with real land value and provides better clarity to stakeholders and authorities responsible for resolving such cases. Furthermore, the Supplementary Guidelines are to be adopted by States/UTs, either in their entirety or with modifications. In the absence of state-specific guidelines, these Supplementary Guidelines shall apply.

• Applicability: Applies only to Inter-State Transmission System lines where landowners have objected to compensation due to Circle Rates being below Market Rates.

• Committee for Market Rate: The market rate of land will be determined by the Market Rate Committee (“MRC”), which includes independent land valuers. The MCR will be chaired by the District Magistrate/District Collector/Deputy Commissioner or their nominee (not below the Sub-Divisional Magistrate). It will also include a representative of the landowners and a nominee of the ISTS Transmission Service Provider (“TSP”). Further, the District Magistrate/District Collector/Deputy Commissioner may add up to two additional members as needed. 

• Land Valuation Methodology: MRC will appoint two valuers, one nominated by the TSP and the other by the landowners' representative. These valuers will be selected from the list of empanelled land valuers by the Insolvency and Bankruptcy Board of India (IBBI). Moreover, the valuers should be from the same state; if not, preferably they may be from any adjoining states. 

The reference market rate will be determined as follows: If the difference between the valuers' market rates is less than 20% over the lowest value, the average of the two valuations will be used. If the difference exceeds 20%, the MRC may negotiate the reference market rate. Additionally, if negotiation fails, a third valuer will be engaged, and the reference market value will be the average of the two closest valuations. Consequently, the assessed reference market rate will serve as the basis for determining the market rate by the MRC. The professional fees/charges of the land valuers will be borne by the TSP and included in the RoW compensation cost. 

• Compensation Rates: The revised rates are as follows– 

  • Compensation for tower bases will remain unchanged and will continue to be in accordance with the RoW Guidelines, i.e., 200% of the land value

  • Compensation for the RoW corridor for ISTS lines will be 30% of the land value in rural areas, 60% of the land value in municipal corporations and metropolitan areas notified by the State Government, and 45% of the land value for municipalities, nagar panchayats, and other urban planning areas notified by the State Government. 

• Authority and Timeline: To prevent project delays, the District Collector may permit the construction of ISTS lines to proceed without obstruction, provided that compensation is paid based on the market rate determined by the MRC. Ideally, the market rate should be determined within one (1) month from the date of the TSP's application. 

• Pass-through by CERC: Financially, if the actual RoW compensation paid by the TSP differs from the base RoW compensation determined for the ISTS Scheme under the Tariff Based Competitive Bidding (TBCB) Guidelines due to the implementation of these Supplementary Guidelines or existing guidelines/policies of the appropriate government, the difference will be eligible for pass-through under Change in Law (CIL) by the Central Electricity Regulatory Commission (CERC).

Conclusion: 

This is a very welcome step that brings clarity and demonstrates the government's commitment to addressing on-ground challenges to achieve its renewable energy goals and net-zero targets. By addressing the shortcomings of previous guidelines, the Supplementary Guidelines aim to create a more transparent and equitable process for land acquisition and compensation. This is expected to facilitate the timely completion of transmission projects, supporting the growth of India's power sector. The government is now focusing on validating route alignments before project approvals to optimize routes, especially in forested and urban areas. Additionally, issues related to transmission projects are being resolved through close monitoring and coordination with transmission service providers and state and central departments.