Reliance Energy transmission venture stuck

Reliance Energy Ltd's (REL's) foray into the power transmission segment seems to have hit another hurdle as state-run Power Grid Corporation is yet to award two western region projects to the Anil Ambani group firm more than two months after it emerged as the lowest bidder.

Reliance Energy Transmission Ltd (RETL), a Reliance Energy subsidiary, had on November 21 emerged as the top contender for setting up India's first fully-independent private transmission lines in Maharashtra and Gujarat at a cost of Rs 1,800-2,000 crore.

However, Power Grid Corporation has not awarded a letter of selection to Reliance Energy Transmission, prompting power regulator Central Electricity Regulatory Commission (CERC) to ask the central transmission utility to expedite the process.

"We have written to Power Grid Corporation and asked them to issue the letter of selection without further delay," a CERC official said adding the letter should have been issued by December 29.

"They (Power Grid) have already missed the deadline and further delay in issuing the letter would not allow the project to be commissioned in time," he said. The project is to be commissioned by March 2010. Reliance Energy Transmission would have to apply to the regulator for a transmission licence by mid-April, the official said.

When contacted, Power Grid Corporation Chairman RP Singh said evaluation was being done and the letter would be issued soon. "The letter will be issued well within the outer limit of April," he said. A Reliance Energy spokesperson refused to comment on the issue.

This is the second time that Reliance Energy emerged as the lowest bidder for a Power Grid Corporation project but is facing delays. In July 2004, Reliance Energy won the bid for setting up grid lines linked to Koldam and Parbati hydel projects in Himachal Pradesh. Power Grid Corporation is yet to sign a joint venture pact for these projects.

The delay in Koldam and Parbati projects had even forced RETL to seek the intervention of Power Minister Sushil Kumar Shinde and Planning Commission Deputy Chairman Montek Singh Ahluwalia last year. This time, the delay is in the case of two projects that are part of the western region grid strengthening scheme.

The two projects are part of PGCIL's Rs 5,000 crore western grid scheme, which ran into dispute in 2005 when Reliance Energy approached CERC for a licence to set up the lines on its own.

While one project is for building sub-stations and grid lines in southern Maharashtra at a cost of Rs 1,100-1,200 crore, the second entails setting up grid lines in Gujarat at an investment of about Rs 500-600 crore. When executed, these would be India's first transmission lines built fully by a private player.

Reliance Energy had outbid seven other firms, including Tata Power, L&T and GMR, to emerge as the top contender.