The government today approved a new policy for allocation of power to be generated by upcoming state-run thermal power plants, earmarking 50 per cent to the home states, while also fixing an overall target generation capacity of 1 lakh MW for the 12th Five Year Plan (2012-17).

"The proposal is for allocation of 50 per cent power to the 'home' states, where the projects are located, 35 per cent to the other constituents of the region and 15 per cent power as unallocated power at the disposal of the Centre," a government official said after the Cabinet meeting.

The proposal pertains to 14 power projects -- Gadarwara, Lara, Talcher Expansion, Kudgi, Darlipalli, Gajmara, Barethi Gidderbaha, Katwa, Dhuvran, Khargone, Pudimadka, Bilhaur and Kathua of National Thermal Power Corporation (NTPC) coming up during 12th and 13th Plan and all thermal plants of central public sector undertakings, an official statement said.

At present the power is shared as per Gadgil formula, which provides for 10 per cent power as preferential allocation to home state, reserves 75 per cent for constituent states, including home state and retains the rest at Centre's disposal.

Under the rule, central power generating stations at present can provide a maximum of 33.3 per cent of the electricity to the home state.

"Enhancement of allocation to 50 per cent to the home states is the only new element in the present proposal," the statement said.

NTPC's Barethi project in the Bundelkhand region of Madhya Pradesh, is expected to spur development of infrastructure in the region, it added.

While 50 per cent of power from the project is proposed to be allocated to Madhya Pradesh, the home state and 15 per cent of power remains as unallocated power, 35 per cent of power is proposed to be allocated as a special dispensation to Uttar Pradesh for development of Bundelkhand region.

Meanwhile officials said that the government has also approved setting a power generation capacity target of one lakh MW for the 12th Five Year plan.

In the current 11 Year Plan (2007-11), the government had targeted 78,000 MW, which was slashed down to about 62,000 MW.