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Power transmission projects: Decision soon on whether to end PGCIL-only route 

Financial Express , Sep 19, 2017

The empowered committee on power transmission is likely to decide on the level of private participation in the newly sanctioned projects of about Rs 1,500 crore as it meets here on Wednesday. While more than Rs 515 crore worth transmission projects are being implemented through the tariff-based competitive bidding (TBCB) route, the committee will have to take a call on whether the rest of the projects in the pipeline would also be put under TBCB (which allows private-sector participation), or be allotted to Power Grid Corporation of India (PGCIL) on the grounds of “technical upgradation”. The amended national tariff policy of 2011 mandated TBCB for all transmission projects after 2013. However, the revised policy in 2016 introduced a few conditions— such as projects of “strategic importance”, “technical upgradation” and catering to “urgent situation” — for exemption of inter-state transmission projects from TBCB.

Private companies in the sector have sought clarity on the definitions of “strategic importance”, “technical upgradation” and “urgent situation”, which prevent larger participation of the private sector in power transmission. Transmission projects of only Rs 64,000 crore has been awarded through the tariff-based competitive bidding since April 2011 compared to the total investments of Rs 3.4 lakh crore. FICCI, in a letter sent to then power secretary PK Pujari in June, had noted that only 6.7% of the transmission network is operated by private players, whereas private players contribute about 44% of the power generation capacity.

Companies who have been awarded transmission projects include Adani Power, Essel Infraprojects, Sterlite Power, Kalpataru Power Transmission, Larsen & Toubro, Reliance Power and PGCIL — the central transmission utility. State-run PGCIL has won 10 projects, worth around Rs 18,000 crore, under the bidding route. According to Sambitosh Mohapatra, advisory partner, power and utilities, PricewaterhouseCoopers, “State transmission utilities do not feel the need to conduct such bids given their ability to develop projects on their own with assured regulated returns on investments and manageable demand offtake, unless there is clear benefit realisation or need to reduce time and cost over runs from govt or regulator.”