KSEBOA - KSEB Officers' Association

Sunday
Apr 30th
Text size
  • Increase font size
  • Default font size
  • Decrease font size
Home News Power Sector News Private players to share power transmission space

Private players to share power transmission space

PDF
Hits smaller text tool iconmedium text tool iconlarger text tool icon

The power transmission business, one of the last vestiges of public-sector dominance, could soon see an influx of private players, with the Centre readying to award projects worth Rs 26,000 crore under the tariff-based competitive bidding (TBCB) route. The clutch of projects to be offered, in terms of their combined size, is more than 60% of all transmission sector projects awarded via TBCB over the last five years.

The Centre's move also marks a policy rethink, given that last year projects amounting to Rs 36,000 crore went to state-owned transmission utility Power Grid Corporation (PGCIL), overlooking the Central Electricity Authority's stance that favoured the TBCB route.

Private firms present in the power sector are keen to become integrated players by investing in the transmission sector, where the rate of return is on a par with that in the generation sector, at around 16%.

Companies like Sterlite Grid, L&T Infrastructure Development Projects, Essel Infraprojects, Tata Projects and Adani Power will obviously be competing to enhance their portfolio in the sector that is dominated by PGCIL. But they do have an unequal competition in PGCIL which has a robust balance sheet. Thanks to availability of comparatively cheaper finance from banks and financial institutions, PGCIL, which gets a chunks of projects on nomination basis, has also grabbed 30% of the projects offered under the bidding route so far.

"As the scale of private participation in the business increases, the field will also become level. Both sides (public and private) come with some positives and some negatives and can co-exist. Gradually all projects must be awarded via the TBCB route. Policy uncertainties need to be avoided," said Anand Agarwal, CEO of Sterlite Technologies, the largest private transmission company with a portfolio of projects worth Rs 8,000 crore.

The optimism of private transmission companies stems from the relatively high value of business that is now up for grabs.
As one private company executive put it, private firms now stand a chance of having a bigger share in the transmission space much like their counterparts in the generation segment.

However, analysts warned that the future of private sector firms in transmission cannot be bright if the government continues with its policy of keeping the TBCB route as the second option. Since 2013, PGCILhas been placing bids that are as much as 60% lower than the average bids of private participants, thus crowding out the fledgling private sector competition.

A Power Grid executive, however, explained that the company's strategy is not to kill competition. Its stature as an experienced inter-state transmission player, with significant economies of scale and a strong balance sheet, had left the company well-positioned to bid competitively for transmission andsub-transmission projects in the 12th and 13th Plans, he said. The company's bids have been aggressive, he claimed, thanks to its strengths and not because it wants to disrupt the TBCB process.

There is also good news for PGCIL in the recently revised tariff policy, which widened the Centre's ambit to award projects to PGCIL on a cost-plus basis — no deadline has been set for elimination of this route. This is despite the recommendation of the Central Electricity Regulatory Commission that all inter-state transmission projects should be awarded through bidding.

Source- Financial Express

 

Add comment


Security code
Refresh

Random Videos

You need Flash player 6+ and JavaScript enabled to view this video.
Title: Power Quiz 2015 Final - Part-1

Latest Comments

Banner

Reference Book

 

Reference Book on Power

Electrical Engineering-- D' 1/4 Size Hard bound-- 1424 Pages-- Just Rs.1000/- only &n...

Visitors Counter

mod_vvisit_countermod_vvisit_countermod_vvisit_countermod_vvisit_countermod_vvisit_countermod_vvisit_countermod_vvisit_countermod_vvisit_counter
mod_vvisit_counterToday3205
mod_vvisit_counterYesterday4743
mod_vvisit_counterThis Month150908
mod_vvisit_counterLast Month142377

Online Visitors: 74
IP: 54.224.204.189
,
Time: 14 : 32 : 29