Nearly all future power transmission projects in the country will be available to the private sector if the government accepts the recommendation of a high-level panel ? a move that would gradually undermine public-sector Power Grid Corporation’s dominance in the sector and bring competition to this crucial segment.
The current practice of giving Power Grid projects on a nomination basis would end and it will now have to compete for projects like any other bidder, including those from the private sector.
Earlier, the government had bid out some relatively small projects to build inter-state transmission lines, but bidder interest was found to be almost non-existent mainly because transmission tariffs are regulated by the Central Electricity Regulatory Commission (CERC). Cumbersome green clearance norms ? with the onus of obtaining them on bidders ? also resulted in the projects not taking off.
Sources said the advisory group set up by the government under the chairmanship of former power minister Suresh Prabhu has favoured reforms in the transmission sector by opening all projects, barring a few strategic ones to be reserved for public sector units, to private investment and fixing a time limit of one month for the CERC to issue licences for such projects.
The group, which is deliberating on how to fast-track coal and power production in the country, is also veering around the idea of using a power sector development fund for the formulation of specific transmission projects and their execution in an efficient manner, sources said. The views of the group would be key to formulating long term policies for the power and coal sectors.
Considering that transmission system development still requires licences, the group has opined that if such clearance does not come within the stipulated time of one month, approval for the project should be deemed to have been given. It has also opined that in the case of transmission projects awarded on the basis of competitive bidding, the special purpose vehicle (shell company formed by the PSUs concerned like REC and PFC with the local government entity) created before the bidding would be immediately transferred to the winning bidder.
The changes being considered by the group are aimed at faster development of transmission networks as the benefit of rapid generation capacity addition would not reach consumers unless a proper network for evacuation of the power is created.
The power transmission sector was opened up for private participation in 2008 and some inter-state projects have gone through competitive bidding since January 2011. States were given two-year extra time to strengthen systems and build capability to undertake planning and carry out the process for tariff-based bidding from January 1, 2013. Since opening of the sector, only 14 inter-state projects have been awarded. Since the projects have not made headway, Power Grid’s virtual monopoly has continued and plans to expand the transmission network remain thwarted.