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Transmission projects stuck in legal limbo

Transmission projects stuck in legal limbo
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First Published: Wed, Mar 05 2008. 11 27 PM IST

Need for bids: The country’s existing transmission capacity of 16,450MW will not be able to handle the 78,577MW of capacity that will be added in the next five years.
Need for bids: The country’s existing transmission capacity of 16,450MW will not be able to handle the 78,577MW of capacity that will be added in the next five years.
Updated: Wed, Mar 05 2008. 11 27 PM IST
The government’s ambitious plan, announced in November 2006, to accept bids on 14 power transmission projects that may require a total investment of more than Rs22,000 crore, on the lines of the so-called ultra mega power projects, has faltered since it failed to provide the legal framework for private companies to enter the sector on their own.
Need for bids: The country’s existing transmission capacity of 16,450MW will not be able to handle the 78,577MW of capacity that will be added in the next five years.
The matter came to light amid opposition from the Power Grid Corp. of India Ltd (PGCIL), the state-owned transmission utility. It turns out that under the existing law, PGCIL is the only entity that can undertake transmission of electricity in India. Private participation is permitted only through joint ventures (JVs) with PGCIL.
A senior official at the Central Electricity Authority, the top planning agency in the Indian power sector, who did not wish to be identified, said: “As per the Electricity Act, 2003, it is the Central transmission utility (CTU) that has the sole right to build transmission projects in the country. This CTU status has been given by the power ministry to PGCIL.”
The Act states, “The Central government may notify any government company as the central transmission utility: Provided that the central transmission utility shall not engage in the business of generation of electricity or trading in electricity.”
Not one transmission project in India has been done solely by a private firm. In the JV evolved by PGCIL, the state utility takes a 26% stake. PGCIL has already commissioned the Tala transmission link, which evacuates power from Bhutan to India, with Tata Power Ltd, and has signed agreements with other private firms for similar projects.
There is an immediate need to seek bids for these projects as India’s existing transmission capacity of 16,450MW will not be able to handle the 78,577MW of additional capacity that will be added in the next five years. India has a current power generation capacity of 140,000MW.
To start with, the government had plans to seek bids for the transmission projects on the build-own-operate model and had even invited expression of interest for transmission systems associated with Maithon (1,000MW), Kodarma (1,000MW), Bokaro (500MW), north Karanpura and Talcher projects. The projects were to be awarded by Rural Electrification Corp. (REC) and Power Finance Corp. , via tariff-based competitive bidding.
“We have already done a lot of preparation work for power evacuation from NTPC Ltd’s north Karanpura project. Even NTPC, to which the power generation project belongs, wants us to construct the transmission project,” a senior PGCIL executive, who did not wish to be identified said. He declined to elaborate.
An REC executive confirmed the delay, but challenged the stance taken by PGCIL.
“PGCIL can also bid for these projects and compete with the private sector. The government has allowed the private sector to enter the transmission sector either through a JV with PGCIL or through bidding solely for these 14 projects,” the executive added.
These 14 projects were identified by an empowered committee and include projects such as the southern-western region synchronous inter-connector and power evacuation projects for Barh II (1,320MW), Nabinagar (1,000MW) and Daripally (3,200MW).
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First Published: Wed, Mar 05 2008. 11 27 PM IST