1. Narendra Modi led NDA govt bypasses bid route, PGCIL to develop 20K MW green corridor

Narendra Modi led NDA govt bypasses bid route, PGCIL to develop 20K MW green corridor

NDA government’s emphasis on the auction route for awarding core sector contracts notwithstanding, state-owned Power Grid Corp (PGCIL) has been nominated...

By: | New Delhi | Published: March 26, 2015 9:33 AM
power, power grid, Power Grid Corp, power transmission, power transmission in India, PGCIL, green transmission corridors, green corridor india, green corridor project india, solar power projects, wind power projects, Bhuj, Banasthali, Chittor, Ajmer, solar energy, Gujarat, NDA government, National news, Economy news NDA government’s emphasis on the auction route for awarding core sector contracts notwithstanding, state-owned PGCIL has been nominated to develop green transmission corridors for 20,000 MW of upcoming solar and wind power projects. (Reuters)

Narendra Modi led NDA government’s emphasis on the auction route for awarding core sector contracts notwithstanding, state-owned Power Grid Corp (PGCIL) has been nominated to develop green transmission corridors for 20,000 MW of upcoming solar and wind power projects, effectively bypassing the competitive bidding route.

While PGCIL was earlier selected on a nomination basis for the execution of the Bhuj-Banasthali-Chittor-Ajmer 765 kV green corridor to harness solar energy in Gujarat, officials said that for the next leg of this corridor, PGCIL — a utility with a near monopolistic presence in the transmission sector and having a 35 per cent institutional shareholding — has been asked to extend this corridor from Ajmer (Rajasthan) to Suratgarh and Moga (Punjab), again on a nomination basis. For this leg of the project, PGCIL is learnt to be negotiating a soft loan through the Manila-based Asian Development Bank.

Under the Tariff Policy, transmission projects are required to be awarded through a competitive bidding process. The only exceptions are those lines that need to be built within a compressed time schedule or under an exigency, where the Central Transmission Utility (POSOCO) can offer these projects on a nomination basis.

The rationale for awarding these contracts to PGCIL on a nomination basis, thereby bypassing the competitive bidding route, is that the gestation period of transmission projects is much longer than building solar plants. However, the rush to assign the projects to PGCIL on a nomination basis has raised eyebrows as no solar or wind power project developer has so far signed the inter-state power purchase agreements.

Recently, PGCIL had won three projects through competitive bidding for the Vindhyachal, Gadwara and Feroze Gandhi Thermal Power stations, which will cost more than Rs 10,000 crore. PGCIL was the lowest bidder in all the three cases, with bids that were significantly lower than the next private sector bidder.

Till 2013, PGCIL had only won two out of eight projects that were awarded through competitive bidding, out of which it did not implement one — a 765 kV line from Vemagiri to Hyderabad via Khammam. The other companies that won five of the other six projects include Reliance Power Transmission, Essel Infra techno Electric, Patel-Simplex joint venture and Sterlite Technologies.

However, in the last two years, PGCIL has won bids for five projects where it undercut the competition through much lower price offering compared to the average price offering for these bids.

Although the power transmission sector was opened to the private sector in 2010, PGCIL continues to command 99 per cent market share and garners 87 per cent of the total revenue realised from the use of inter-state lines, including state lines used for the purpose.

In contrast, the power generation sector has private producers contributing well over one-third of the capacity after the Electricity Act, 2003, opened up the sector to private participation.

  1. R
    Ramesh Narendrarai
    Mar 27, 2015 at 10:40 am
    I wrote the comment. You may retrieve it.
    Reply
    1. R
      Ramesh Narendrarai
      Mar 27, 2015 at 10:39 am
      The more important question is - Is PGCIL capable of fulfilling the target ? If yes, then let it go ahead. Pragmatism is more important than mere principles. Left or Right, Communal or Secular - all these are pe'. Only that which works in actual practice, is right.
      Reply
      1. K
        Kumar
        Mar 27, 2015 at 6:18 pm
        The private sector transmission companies doesn't have the capabilities to commission the projects in short gestation projects. The decision of the government to offer the projects to PGCIL is justified even though the cost will be slightly higher as the public sector company is liable for audits such as CERC/CAG/CVC & Govt., etc., PGCIL has executed 90% of the projects in time and the rest due to ROW issues concerning to particular states / state Govt., departments
        Reply
        1. C
          common
          Mar 26, 2015 at 4:50 pm
          Yes, the issue can be raised by any MP or by starred question. Why not? But Power Grid is not owned by any one but the poor person on the road.
          Reply
          1. J
            JORDAR THALIA
            Mar 27, 2015 at 1:24 pm
            Well done, keep up the tempo. Our country should be miles ahead, catching up with the delay and poor pace, all these decades.
            Reply
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