Power transmission fails to open up arms for private investment
Last year, on several occasions, Piyush Goyal, minister of state for coal, power and renewable energy said that power transmission sector would be the next sunrise industry for private investment and the government would award projects worth Rs 1 lakh crore during 2015-16 through bidding route.
As the power sector enters new financial year with record generation capacity, both in conventional and renewable energy, investment in transmission is clearly lagging. Of the committed Rs 1 lakh crore, projects worth Rs 18,000 crore were tendered out.
Aimed at power evacuation mostly in Eastern and Southern India, these were inter-state transmission corridors in Chhattisgarh, Odisha, Andhra Pradesh, Telangana and some parts of North.
A total of 13 projects went under the TBCB (Tariff based competitive bidding) route during FY 2015-16 with cumulative estimated cost of Rs 18,300 crore. Three projects each were won by Sterlite Grid, Essel Infra, Adani Power and state owned Power Grid Corporation of India. One was won by Kalptaru Power Transmission Limited (KPTL).
These projects were shortlisted by the Central Electricity Authority to be awarded through ‘Tariff based competitive bidding (TBCB)’. The two subsidiaries of ministry of power – Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) conducted the bidding process of these projects.
“In the next six to 12 months, at least Rs 1 lakh crore of transmission capacity will be bid out. And, I see global players coming to India. It’s a great annuity business,” Goyal told this paper in June 2015 in an interview.
While the above mentioned projects witnessed close bidding, many players left the transmission business for lack of opportunities, said a Delhi based power sector expert.
“Whether it is European major Isolux Corsan or Indian companies like L&T, most of the noted names have either slowed down or stopped participating as big projects are not being offered,” he said.
Power transmission sector was opened up to the private sector in 2010 with the award of Western Regional System Strengthening to Reliance Infra and East-North Interconnection line to Sterlite Energy. CERC in 2011 has mandated that power transmission projects should be awarded through tariff based competitive bidding like is the case with generation projects. Power Grid was the only company operating in this space till then, since 1989.
The recently amended National Tariff Policy mandates that apart from projects of strategic importance which would be nominated to state owned Power Grid, all should be awarded through TBCB. However, the perimeter of nomination is not defined.
“It has been decided to increase the basket of projects under TBCB significantly. The Tariff Policy does not mention the demarcation but the government is working towards awarding as many projects through TBCB,” said a senior power ministry official.
A government statement recently said Power Grid commissioned transmission projects worth Rs 30,300 crore (unaudited) during 2015-16, which is the highest-ever commissioning achieved by the company.
Power Grid is the market leader in power transmission. The company officials said Power Grid would continue to participate in TBCB as “nominating a project is the sole discretion of the government.”
During the current fiscal, six more projects totalling more than Rs 9000 crore would be awarded through TBCB. First phase of Green Corridors costing Rs 40,000 crore is being built by Power Grid, nominated to it last year.
The second phase of Green Corridors costing Rs 50,000 crore is likely to be awarded through TBCB over time. Policy directive is yet to come.
