Power majors head for India

Focus is on transmission, not generation.

After a five-year break, international power companies are again making a beeline for India. But the focus this time is on transmission and not generation.

In the last few months, a slew of European and Asian companies have written to the Power Grid Corporation of India enquiring about developments in the India.

Some have even attended pre-bid meetings organised by Power Grid, the nodal agency for the Rs 71,000 crore national grid spread over 31,000 circle kilometres.

The list includes Spain's Isolex Wat and some Russian players, which attended the pre-bid meetings for the Koldam joint venture project. There are some Asian players like China Light, Askone of South Korea and a few Malaysian companies. A Power Grid executive said Germany's RTE and EDF of France had also shown interest.

Although none of them has bid for the joint venture projects, or for the setting up of independent power transmission companies, Power Grid executives said international transmission majors might form a consortium to participate in joint ventures with the state utility.

Reliance Energy has also applied for the setting up four fully owned private transmission lines in Maharashtra.

Power ministry officials attribute the reluctance of global majors to set up power transmission companies to their past experience in the country.

"There has been some interest when we have gone abroad. But people are still wary of investing because of the experience that electricity generation companies had in the past. Once the Dabhol issue is resolved, the interest may turn into investments," the officials said.

The lack of a proper regulatory framework is also a reason for concern. Although the Electricity Act, 2003, provides for wholly owned private transmission ventures, the Central Electricity Regulatory Commission is yet to come out with detailed guidelines.

One thing, however, is certain. Power Grid will lay a majority of the 31,000 circle kilometres of transmission lines planned for the national grid.

So far, work on 8,400 circle kilometres has been completed and the government is targeting to complete the remaining 23,000 circle kilometres by 2007.

The national grid is estimated to cost around Rs 71,000 crore, of which Rs 21,000 crore is to be spent in the Tenth Plan period, which ends in March 2007, and the remaining during the Eleventh Plan.

Power points

• The list of power majors interested in India includes Spain's Isolex Wat, South Korea's Askone, Germany's RTE, France's EDF, and China Light. Some Russian and Malaysian companies are also keen
• Lack of a proper regulatory framework is, however, a major point of concern as CERC is yet to finalise guidelines on 100% private power transmission ventures
• Power Grid is setting up the Rs 71,000 crore National Grid, spread over 31,000 circle kilometres