In a major boost to public-private partnership in the power transmission sector, the Jharkhand government has announced projects worth Rs 5,180 crore, making it one of largest outlays ever for strengthening of the intra-state transmission system. The projects would be awarded through tariff-based competitive (TBC) bidding.
At the central government level, 20,000 circuit kilometres of transmission projects have been awarded thus far under the TBC bidding regime. The tender for the next round of bidding in Jharkhand for the remaining over Rs 5,000 crore transmission projects can be expected next month, a state government official told this newspaper.
Jharkhand has issued a notice inviting tender (NIT) for five projects and the first stage Request for Qualification (RfQ) is under the issue and is due for submission on October 23rd. In mid-August, the Jharkhand cabinet had cleared investment in intra-state transmission to strengthen infrastructure.
The state has planned investment of over Rs 10,000 crore in the transmission sector till 2018-19 in line with its target to quadruple its growth from the current capacity.
“Considering the magnitude of expansion that the sector requires, we believe that private sector will play an integral role,” said a private company official.
Companies that are in fray for the transmission projects include Adani Power, Essel Infraprojects, Sterlite Power, Kalpataru Power Transmission, Larsen & Toubro, Reliance Power and Power Grid Corporation of India Ltd (PGCIL)
Industry experts feel that these projects are expected to attract healthy competition from all transmission developers and are expected to create assets for easing the energy delivery bottlenecks, helping power reach to the farthest of corners of the state, that too with efficient cost economics.
The model of Build, Own, Operate and Maintain (BOOM) under which the bidding for these projects is to be carried out allows the government to raise assets without investing any public funds upfront and the tariff outgo happens over 35 years, which saves the exchequer money to be utilized for other priority sectors such as health, education, rural electrification etc.
The BOOM model has resulted in huge savings for the exchequer in central government transmission projects.
The Union government has already provided an enabling policy environment for such similar approach in states and now states are coming up with implementation mechanism lead by Jharkhand. This may prove an example for all other financially constrained utilities across the country.
Experts believe the key benefits associated with awarding transmission projects on TBC bidding route include reduced tariffs, faster completion of projects and innovation in the construction and erection technology, transparency and overall economic benefits.
Other advantages include faster capitalization of the projects is the delivery as TBC bidding projects get delivered in 2-3 years while EPC model normally takes 4-5 years.
According to sources, preliminary assessments indicate that considering 30 per cent of the planned investments is taken under PPP mode in Jharkhand, tariff impact will be in the range of 10 paise to 15 paise per unit.
