Transmission Line Tower foundations/Corridor compensation - need for review

Jagmohan Sharma

jagmohansharma1602@gmail.com

The power sector is a foundational pillar of India's infrastructure, directly driving the Prime Minister's vision to transition the nation into a developed economy (Viksit Bharat) by 2047. Recent geopolitical conflicts in West Asia underscore a critical reality: India's long-term energy security depends heavily on the development of its indigenous resources. Consequently, the government has launched a massive push toward Renewable Energy and its seamless integration into load centres via the National Grid. As economic momentum accelerates, power demand will surge proportionately. To satisfy the rising expectations of consumers, the transmission sector must scale rapidly alongside generation and distribution to ensure a robust, future-ready network.

Under the constitutional framework of India, the power sector is governed by the Concurrent List, meaning both central and state governments hold jurisdiction and can legislate on this sector. Consequently, transmission infrastructure is executed by state and Union Territory utilities in tandem with POWERGRID, the primary central government Transmission System Providers (TSP) which is under the administrative control of the Ministry of Power (MoP). In addition the private sector is also involved in this endeavour of building power transmission infrastructure.

From the inception of India's transmission network until the realization of the "One Nation, One Grid, One Frequency" vision in December 2013, transmission line construction was legally governed by the Indian Telegraph Act of 1885. This legislation granted Transmission System Providers (TSPs) unrestricted access to both public and private land for vital activities, including initial and final surveys, tower spotting, foundation casting, tower erection, conductor stringing, and the transit of construction materials and equipment.

Crucially, the Act did not mandate compensation for the actual land occupied by tower foundations, nor did it require Right of Way (ROW) charges for the land over which conductor was strung. Instead, landholders were compensated exclusively for documented damages to crops, trees, and physical structures. Jammu & Kashmir was probably the only state/UT where compensation was paid to the landowners whose land was acquired for erection of towers. Compensation was not paid for the line corridor even in Jammu and Kashmir.

With the passage of time and rapid urbanization in the country the land prices in all districts of the country skyrocketed. The most affected areas were the towns, metropolises and their suburbs.

While the country gradually developed, the demand for electricity increased too. The situation was exacerbated with the rising population and the increase in expectations. This pushed the electricity demand gradually to new highs. Therefore, the power utilities began installing high/extra high voltage power transmission lines for wheeling bulk power across the country. Technology did help in transmission of bulk power, but the size of the tower foundations increased as also the width of the corridor for laying of transmission lines. Therefore, the landowners started looking for compensation for the land on which towers were erected and conductor strung.

The result was that the Indian Telegraph Act of 1885 became a hurdle rather than a facilitator in construction of transmission lines essentially as the act provided for erection of poles and conductor in smaller corridor while the TSPs were now obliged to erect towers with large base area and bigger corridors.

Then came the Electricity Act of 2003. The primary purpose of the Act was to completely restructure and modernize the Indian power sector. It brought in a legal framework to introduce competition, encourage private investment and protect consumer interests. It encouraged unbundling of state power utilities as well as promoted renewable energy. The act gave powers to the Transmission Line licensees to construct transmission lines under section 67 and 68 of the Electricity Act read together with sections 10 and 16 of the Telegraph Act. However, it remained silent on the issue of compensation for the land coming under transmission line tower foundations and the corridor. Compensation to the landowners was again restricted to damage caused to their crops, trees and other physical assets during construction of the lines.

Overtime, the engineers and administrators associated with the transmission line projects were getting jittery as they had started facing humongous resistance from the landowners while constructing the transmission line network.

In April 2015, at the power ministers conference in Guwahati, several states raised the issue of RoW compensation. The committee constituted by the Ministry of Power (MoP) recommended that compensation for the land under tower base should be restricted to 85% of the land value as assessed by the District Magistrate (DM) based on Circle Rates for tower base between four legs of the tower.

The issue of compensation for the corridor of the lines was left for the states/UT to decide. However, they were advised that the compensation should not be more than 15% of the circle rates notified by the DM.

The circular of 15.10.2015 became the most widely adopted compensation framework across the states/UT and became the basis of their RoW policies.

Fast forward to 15.12.2025 when a new notification was issued by the MoP on the methodology to be adopted for calculation of market price of the land in question and therefore the compensation to be paid to the landowners. The notification dated 15.12.2025 was in fact an amendment/extension to the notifications issued on 14.06.2024 and 21.03.2025. All these notifications must be read together to understand where things stand today.

As things stand today the compensation for the tower base has been fixed at 200% of the land value, and the size of the tower foundation is notified as the actual footprint between the four legs of the tower plus one-meter extensions on each side.

RoW compensation for the line corridor is fixed at 30% of land value in rural areas, 45% in the Municipal and Nagar Panchayat areas while as in the Municipal and Metropolitan areas this has been fixed at 60%.

These notifications are targeted for the Inter-State Transmission System (ISTS). State and Union Territory governments have been given a choice to adopt these regulations in their entirety, or implement them with amendments tailored to their local requirements

Therefore, the methodology for fixing the value of land becomes important. For this purpose, the MoP introduced the concept of Market Rate Committee (MRC) under the chairmanship of the DM (District Magistrate). The committee includes representatives of the landowners and that of the TSP. Other members of the committee are stipulated to be the three "Independent Valuers" (IVs), one each representing the DM, TSP and the landowners. The "Valuers" shall be selected from the empanelled list of the Insolvency and Bankruptcy Board of India (IBBI). It has also been stipulated by the MoP that in order to prevent procedural delays, the MRC must appoint all three independent land valuers on the exact same day the committee holds its initial meeting and they must submit their report to the DM within 21 days of the first meeting in sealed covers.

The sealed covers from the IVs now hold the key to determining the cost of the land involved. The MRC, in the first instance will pick up two of the three sealed envelopes randomly and ascertain the values mentioned in the two. If the valuation gap between the two selected reports is less than 20%, the MRC will take the exact average of the two figures as the final market rate. If the gap exceeds 20%, the reference rate will be set at 10% above the lower valuation. If this is unacceptable, the MRC shall open the third valuation report and set the reference market value as the average of the two lowest valuations among all three reports.

Before proceeding any further let's try to understand the "Circle Rate". It is the minimum rate that defines the stamp duty to be paid by the purchaser of the land. The state/UT government notifies the circle rate of an area through a structured statutory evaluation process, culminating in formal approval and notification by the Revenue Department. To reach this conclusion, the DM leverages an extensive administrative framework, ground-level revenue machinery, and empirical valuation tools.

It is important to note that regardless of whether the line is an Inter-State Transmission System (ISTS) or is owned by a State/UT utility, it is only the Revenue Department of the state/UT that plays a pivotal role in fixing compensation and clearing RoW issues

Coming back to MRC. The Market Rate Committee (MRC) framework introduces a paradigm shift by prioritizing Independent Valuer (IV) assessments over statutory Circle Rates for land valuation. A critical lacuna in the notifications, however, is the absence of a standardized framework for empirical evaluation or explicit guidelines required to legally uphold an IV's valuation. In the absence of objective criteria, IVs rely heavily on discretionary judgment, leading to significant variations in assessed market values. This divergence invariably causes ambiguity, as landowners demand compensation aligned with the highest available valuation. To illustrate the point; if the three IVs evaluate a parcel of land at ?30 lakhs, ?50 lakhs, and ?100 lakhs, then establishing a mutually acceptable compensation figure becomes logically difficult. Although structurally sound on paper, this mechanism fails to account for human psychology of looking for higher/inflated compensation.

This mechanism inherently also introduces a regulatory contradiction. A single geographic/administrative pocket will now be governed by two distinct, government-sanctioned land rates - the statutory "Circle Rate" and the MRC-determined "Market Rate." This dual-rate system triggers profound legal and administrative conflicts. Let me illustrate it with an example. If a landowner, who has been compensated at MRC rates for the plot of land on which a tower has been erected, chooses to buy a nearby plot of land. Will he/she pay stamp duty at the "Circle Rate" or at the market rate determined by the MRC? To the best of my understanding this will result in a critical financial conundrum and will open gates to statutory complications and audit queries.

At the same time, operating two parallel, government-backed valuation metrics undermines the legal sanctity of the circle rate as well as the market rate assessed by the MRC. It also raises confusion as to which of the rates should be used as the definitive baseline for public revenue.

Another problem TSPs face when there is a significant disparity in land valuation rates between adjacent villages as assessed by the MRC. This discrepancy often triggers widespread disillusionment and a sense of injustice among neighbouring landowners, directly escalating right-of-way disputes. Consequently, these localized conflicts lead to severe project delays, legal gridlocks, and ultimately stalling the construction of critical transmission lines.

In my considered opinion, there are two viable solutions available to come out of this quagmire.

The first one is to leverage the established framework of "circle rates." The government may mandate a legally defensible, standardized premium over prevailing circle rates to determine landowner compensation. Because circle rates are established through a rigorous, statutory process by competent authorities, they carry inherent legitimacy and consistency. Utilizing this structured framework effectively eliminates potential legal or audit complications.

This balanced approach maintains uniformity in land valuation and directly addresses landowner grievances. Concurrently, it enables Transmission Service Providers (TSPs) to resolve Right-of-Way bottlenecks and adhere to their committed contractual schedules.

Ideally the circle rates should be updated annually to accurately reflect macroeconomic fluctuations, serving as a reliable foundation for stakeholder compensation. In such a case even premium over the "Circle Rates" will not be required.

Alternatively, the Ministry of Power (MoP) could establish legally tenable guidelines for Independent Valuers (IVs) to determine the market rates of specific geographical/administrative areas. It should not be left to their individual freewill. Under this framework, the values submitted by three IVs to the District Magistrate (DM) could be averaged to notify a single, definitive market price. This approach would eliminate the dual mechanism of using both the existing "Circle Rate" and the MRC's "Market Rate"; instead, the MRC-established rate would serve as the updated "Circle Rate" for all practical purposes. Crucially, because power falls under the Concurrent List of the Indian Constitution, the MoP and State/UT governments policies must align seamlessly. Discrepancies in compensation could otherwise stall transmission network expansion. There cannot be conflicting compensation benchmarks - one for the Inter-State Transmission System (ISTS) and another for intra-state utilities - especially since both are administered by the same State Revenue Department and DMs. Ultimately, it matters little whether policy bottlenecks delay state-owned utilities or ISTS lines; they are complementary networks, and one cannot function effectively without the other.

It is also important to note that the current notification mandates a compensation payout of 200% to landowners hosting transmission line towers. Given that the MRC process already establishes the fair market value of the land, providing a payout at twice the assessed rate raises critical economic, legal and statuary questions. Plainly put, once it is suggested that the MRC has assessed the real market rate of the land then why pay twice that amount as compensation?

In my opinion, because of the challenges mentioned above, the notification of the MoP, GoI dated 15.12.2025 needs a review along with the main notifications dated 14.06.2023 and 21.03.2025. If it isn't done at an earliest the resultant uncertainty about compensation to landowners shall only delay construction of transmission lines.

(The author is Former ED, POWERGRID/CEO Aster Pvt. Ltd./Chairman, JPDCL)