New Delhi: The government is planning to split Power Grid Corp. of India Ltd (PGCIL), the largest state-owned power transmission company, removing its key power management functions from the firm that also trades on the Bombay Stock Exchange.
Based on the recommendations of a government committee, the plan, when implemented, will leave PGCIL with only the task of setting up transmission links.
The Union government plans to transfer the power management functions of PGCIL to a new entity which will remain its subsidiary for three years after which it will be hived off as a separate public sector unit.
Click here to listen staff writer Utpal Bhaskar’s interpretation on load-shedding at PowerGrid
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The same committee has also recommended divesting state-owned transmission utilities of their power management functions, a suggestion that is already drawing criticism from various states.
State load dispatch centres, or SLDCs, are currently part of transmission utilities owned by the states. This gives SLDCs a leverage to overdraw power from the grid during power shortage.
Currently, there are 33 SLDCs. Five regional load dispatch centres, or RLDCs, and one national load dispatch centre, or NLDC, are run by PGCIL. They collectively employ around 1,200.
Also see: Power play (graphic)
The committee, headed by additional secretary G.B. Pradhan in the Union power ministry, recommended setting up a separate representative board structure that would oversee the functions of the five RLDCs currently run by PGCIL—the northern region, eastern region, north-eastern region, western region and the southern region.
Anil Razdan, Union power secretary, insisted that such a move won’t leave PGCIL with very limited functions noting that the report needs to be discussed before it is implemented. “PGCIL will be doing the major transmission work in the country,” he said. “We will be shortly calling a meeting of all the stakeholders to take this report forward. These are recommendations which need to be discussed further.”
But the committee report, reviewed by Mint, makes it a fait accompli.
“At the RLDCs/NLDC level, the Government of India has already taken a decision for setting up a wholly owned subsidiary of PowerGrid responsible for the independent system operation of RLDCs and NLDC...” the report says.
Mint had reported on 12 February 2007 about the Centre’s plans to curtail PGCIL’s functions.
The paring of PGCIL has been initiated in keeping with the provisions of the Electricity Act, 2003, which seeks to separate commercial interests from load management functions.
While the commercial tasks entail setting up of transmission projects, the load management functions require PGCIL to match demand and supply of electricity in the country in a neutral manner. The government believes that with the entry of private players in generation and transmission, failure to separate the two functions might lead to a conflict of interests.
“It is a good idea in theory since it provides unified control for system operations, which is important for system security. However, I do foresee opposition from the states since they will lose the capability to overdraw beyond limits. It will also become difficult to play favourites on power supply allocation when a truly independent and neutral system operator takes over,” said Anish De, chief executive of Mercados Asia, an energy consulting firm.
Some states are already opposing the move.
“What is the government talking about? After all these years it has not been able to privatize distribution except in Delhi and Orissa. Where is the political will to implement this? Why will any state want to lose control over SLDCs?. This is a carrot-and-stick policy that the Union government is using. Implementation of existing laws that are in place alone will stop the states from overdrawing power,” said a senior official of Delhi Transco Ltd, which is the state transmission utility for the National Capital Region, or NCR, who didn’t want to be named.
The plan appears to have accelerated soon after the exit of PGCIL chairman and Managing director R.P. Singh who had opposed it during his tenure. Singh declined to comment.
Says S.K. Chaturvedi, chairman and managing director, PGCIL:“The concept is that the system operator should not manage the grid. This is an attempt to remove doubts from the minds of private power-generation companies about any bias on part of the system operator. We have always remained neutral. The new company will be PGCIL’s subsidiary for three years after which a decision on it will be taken.”
The committee, in its report, said: “The state governments are urged to create a separate representative board structure for governance of load dispatch centres...” It has also said that “the financial accounts should be separated for all LDCs by 31 March 2009...”
In an attempt to make LDCs financially self-reliant and autonomous, the committee has recommended independent and sustainable revenue streams. It has also recommended introducing a system of operator’s certification similar to the practice followed for the air traffic controllers and setting up a Central institute for training of system operators.