Licence fee in transmission

The Central Electricity Regulatory Commission today proposed a 0.1 per cent of the transmission charge as the annual licence fee for companies entering the inter-state transmission business.

"The licence fee for the construction period shall be Rs 1 lakh. However, after the commissioning of the project, the annual licence fee shall be 0.1 per cent of the annual transmission charges subject to a minimum and maximum of Rs 1 lakh and Rs 1 crore, respectively," the power regulator said in the draft guidelines.

The transmission charges will be fixed by CERC unless the project is awarded through a bidding process in line with the Centre's guidelines.

Companies seeking to enter the business would require a net worth equal to the value of the annual transmission charges.

However, they need not possess the necessary technical expertise, though they would be required to deploy personnel with relevant experience.

The licence will be valid for a period of 25 years from the date of issue. "It has long been recognised that the massive investment, which is required in the transmission sector, is not possible without the participation of the private sector," CERC said in a release.

The 31,000 circle KM national grid is estimated to cost over Rs 71,000 crore and is proposed to be funded through multilateral loans and debt raised by the Power Grid Corporation Ltd.

A portion of the grid is to be implemented through joint ventures between the Power Grid and private players, while independent power transmission companies are also proposed to be allowed.

Reliance Energy had recently approached the CERC with an application to set up four transmission lines in Maharashtra. CERC can also revoke the transmission licence in case of defaults or violation of the terms and conditions and the terms can be amended in public interest or an application made by the licensee.