After languishing for nearly two years, the Centre's efforts to build large power transmission lines with private sector participation, on the lines of the ultra mega power project series, is seen making a comeback. Nodal agencies Rural Electrification Corporation Ltd and Power Finance Corporation Ltd have entered the market with global requests for qualification for three projects together costing around Rs 7,000 crore, to be developed under the build-own-operate-maintain (BOOM) method.
REC has been entrusted with the augmentation of the Talcher-II transmission system in Orissa and that of grid strengthening of the northern and western regions to enable import of power from NTPC's North Karanpura power project in Bihar. PFC is seeking developers for the scheme to enable transmission of surplus power from the northeastern and eastern regions to the northern region.
Speaking to Projectmonitor, a senior REC official said that the bidding process would be coordinated by a newly-formed subsidiary, REC Transmission Projects Company Ltd. For each of the two projects, a shell company will be formed that will be transferred to the respective developer selected using the competitive tariff bidding route. He explained that the licence period for operating and maintaining the project would be 25 years, and the entire lifetime of the project would be considered as 35 years. PFC has already floated a shell company, East-North Interconnection Company Ltd, which would initially be the corporation's wholly-owned subsidiary. Both the agencies are expected to pre-qualify developers by December-end.
In late 2006, both REC and PFC had invited expressions of interest for developing these very projects on BOO basis. The exercise did not fructify for a variety of reasons including the irregularities seen in the award of the Sasan ultra mega power project in Madhya Pradesh for which PFC was the nodal agency. In fact, faced with delays in the developer selection process, one power transmission project reverted to the EPC route. The project in question was the evacuation system associated with Damodar Valley Corporation's upcoming Maithon Right Bank thermal power plant. This project is scheduled to supply power for the Commonwealth Games 2010 and the decision to proceed with the EPC route was taken to ensure timely completion of the transmission system.
With REC and PFC now renewing the process, India can look forward to more private participation in the power transmission sector-an area that is currently dominated by Central utilities. In 2006, the Centre announced an ambitious plan of developing around 14 large power transmission projects on the lines of the UMPP series.
REC officials said that they were confident of a good response to the bidding process given the growing interest of the private sector in large power projects, alluding to the ultra mega power projects in which three projects have already been awarded. An analyst pointed out that it was high time that private sector got involved in power transmission also. India is expected to add nearly 80,000 mw of new power capacity in the ongoing 11th Plan period, and private participation is more than warranted in developing supporting power evacuation infrastructure.
For PFC, the private transmission initiative is the second occasion where it would act as the nodal agency after UMPP. For REC, this would be first such role. REC officials also said that a new subsidiary, REC Power Distribution Company Ltd, had also been formed to take up similar initiatives in the distribution sector.
So far, the grid strengthening for the western region is the only large power transmission project that is being developed through 100 per cent private participation. Reliance Infrastructure Ltd (formerly Reliance Energy Ltd) is developing two projects of this scheme under the tariff-based bidding route.
Central power utility Power Grid Corporation of India Ltd has also formed minority joint ventures with private sector developers for setting up transmission facilities associated mainly with private (IPP) projects. According to information available with Projectmonitor, PGCIL has formed such joint ventures, in which it would hold 26 per cent equity, with Reliance Infrastructure Ltd, Torrent Power Ltd, Jaiprakash Hydro Power Ltd and Teesta Urja Ltd. The JV with Reliance Infrastructure is for the NTPC's 800-mw Koldam and NHPC's 800-mw Parbati (Stage II) hydropower projects. With the others, the joint venture will be responsible for power evacuation of the respective generation projects-Sugen (1,100 mw), Karcham-Wangtoo (1,000 mw) and Teesta-III (1,200 mw).