PowerGrid to form new arm by March

PowerGrid to form new arm by March

New Delhi: The new subsidiary of Power Grid Corp. of India Ltd, or PGCIL, that will take care of the power management functions of the state-owned power transmission company will be formed by March 2009. And, it will be spun off as a separate public sector unit within three years.

Based on the recommendations of a government committee headed by G.B. Pradhan, additional secretary in the union power ministry, this move will leave PGCIL with only the task of setting up transmission links. “The proposal to form the subsidiary is with the PGCIL board and (it) will be formed within four months. They are currently working on separating the accounts (of setting up and managing networks)," said Pradhan.

A PGCIL executive, who didn’t want to be named, confirmed the development. “Our basic mandate was the development of the national grid. We later took over the load management functions from the Central Electricity Authority (the country’s apex planning body in the power sector). It was only a facilitation service extended by the PGCIL and the formation of the new subsidiary will not affect us greatly. The Electricity Act has said that the system operation functions should be separate (from that of setting up the system)."

The move to separate the two functions is in keeping with the provisions of the Electricity Act, 2003, which seeks to separate commercial interests from load management functions.

PGCIL currently owns and operates 67,000km of transmission lines and transmits around 45% of the power generated in the country through its network. It ended 2007-08 with revenues of Rs4,700 crore and a net profit of Rs1,420 crore. Mint had reported the government’s plan to separate the network creation and management functions on 12 February 2007.

The Pradhan committee had recommended setting up a separate representative board structure overseeing the functions of the five regional load dispatch centres, or RLDCs, currently run by PGCIL—the northern region, eastern region, north-eastern region, western region and the southern region.

S.K. Chaturvedi, chairman and managing director, PGCIL, is on a visit to the US and Brazil, and could not be reached for comment.

“This is an attempt to remove doubts from the minds of private power-generation companies about any bias on part of the system operator," Chaturvedi had earlier told Mint. The move had been opposed by the firm’s former chairman and managing director R.P. Singh who retired in May.

While PGCIL’s primary task is setting up of transmission projects, the load management function requires it to match demand and supply of electricity in the country in a neutral manner.

Amol Kotwal, deputy director, energy and power systems practice at consultant Frost and Sullivan, said: “It might not augur well for PGCIL as an entity as its load management functions will be removed. However, from a national perspective, it might be good because the hived-off public sector unit will be able to manage the load demand functions in a better manner without any regional bias."