Govt to offer Rs 75,000 cr power transmission projects to private firms

A record-high Rs. 75,408 crore worth of power transmission projects has been approved by the Centre to be offered under the bidding route, making it the largest tranche under tariff-based competitive bidding (TBCB).

Last month, the National Committee on Transmission (NCT) convened with a draft agenda of projects worth Rs. 64,000 crore.

However, the approved list of projects has seen an upward revision to Rs. 76,201, of which three projects of Rs. 793 crore are to be built by state-owned Power Grid Corporation of India Limited (PGCIL) under the regulated tariff mechanism. At its recent meeting, the NCT, under the aegis of the Ministry of Power, approved these power transmission projects connecting renewable energy zones (REZs) in Gujarat, Rajasthan, and Maharashtra and hydropower projects in Himachal Pradesh with the national grid.
 

Of these, the upcoming biggest REZ in the country, at 30 gigawatt (Gw), Khavda RE Park, in Gujarat, has received the biggest tranche.
 

Another significant REZ that has received a transmission system is the Jaisalmer/Barmer Complex of the Rajasthan REZ, with a renewable energy generation capacity of 7.5 Gw.
 

The last largest tranche of power transmission projects offered to the private sector was in 2015, when eight projects adding up to Rs. 50,000 crore were tendered — most aimed at green energy zones.
 

While this basket of project offerings will see huge private sector investment, given that such a large tranche is happening after a long hiatus, several regulatory chinks need to be ironed out first, according to the industry.
 

Leading sector players, including Adani Transmission, Sterlite Power, Essel Infraprojects, Kalpataru Power, and Tata Power, are expected to participate in the tender process, informed industry executives. Senior officials indicated that project tendering would commence this financial year (2023-24). After NCT’s approval, a gazette notification by the Ministry of Power, followed by a project-wise request for proposal by two tendering agencies, Power Finance Corporation and REC, would kick-start the process.
 

“This is possibly the largest tranche of transmission projects that has ever been bid out in such a short period of time. This is quite natural because a large amount of renewable capacity is being planned. Grid bottlenecks are the biggest challenge, but once they are solved, we will be much more likely to meet our targets. The government has done a fantastic job of getting its entire system aligned and reducing the timeline for approving as well as for awarding projects. Also, awarding projects in large quantities so that transmission can get built ahead of generation," said Pratik Agarwal, Managing Director, Sterlite Power.

He, however, added, these projects need to be in a ‘shovel ready’ format. “After the project is awarded, a bidder will have to spend 12-18 months on obtaining all approvals. If that process can be started by the Bid Process Coordinator or the Central Transmission Utility (CTU), which is the counterparty for all the bids, then the project timelines can fast-track significantly,” he said.
 

He said the private sector players and the industry associations are working closely with the government to iron out the challenges of ‘right of way’ (RoW), land and forest clearances.
 

Another hurdle industry leaders pointed out is the lack of a diverse set of component suppliers. Currently, there are import restrictions on several components in the transmission supply chain, especially from neighbouring countries. But China remains the largest manufacturer of these components, followed by the European Union and the US.
 

Industry players have also pointed out that they have been asking for PGCIL — the largest power transmission company in the country with close to 85 per cent market share — to be kept out of the bidding process.
 

While the decision was made to separate CTUIL, it hasn’t been done yet, said an industry executive. CTUIL is the power transmission network planner for the country and is also responsible for identifying projects that are awarded either through TBCB or nominated to PGCIL.
 

The last National Tariff Policy, 2018, laid down the mandate that all power transmission projects be awarded through TBCB unless they are in locations of strategic importance or of security concern where PGCIL should do the construction.

PLUGGED IN

Rs. 1.5 trillion Value of power transmission projects expected this year

Rs. 76,000 crore Value of projects approved by the National Committee on Transmission

Key projects

Khavda REZ (8 Gw), Gujarat

Khavda REZ (7 Gw), Gujarat

Rajasthan REZ (5.5 Gw)

REZ: Renewable energy zone

Gw: Gigawatt

Sources: Industry, National Committee on Transmission