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Tariff-based bidding good for everyone: R N Nayak

Interview with CMD, PowerGrid Corporation

Sanjay Jog Mumbai
PowerGrid Corporation faces competition from private players in the transmission capacity addition. Notwithstanding, the Navaratna company is quite confident of completing its investment target of Rs 1.10 lakh crore by the end of the 12th Plan period. In an interview with Sanjay Jog, chairman and managing director R N Nayak explains the strategy. Edited excerpts:

Being a central transmission utility, PowerGrid has been criticised for suppressing other players. How do you react?

It is factually incorrect. If you recall, two years ago the claim was that PowerGrid was expensive and there should be competitive bidding. When PowerGrid started giving reasonable price, in fact the price quoted by others, they happened to be the lowest. Then the complaint was that level-playing field has not been given. I really do not understand what level-playing field is. The government wants the cheapest transmission service. Intent is not to privatise but to increase the cost of transmission lines. Government wants transmission service be provided at a reasonable price and PowerGrid is meeting it.
 

Still your competitors feel that PowerGrid is being favoured. What do you have to say?

This is not true. Whoever is giving such information, their intent must be to discourage PowerGrid to offer good price. But PowerGrid is a professionally-managed company. Our work demonstrates our purpose.

How PowerGrid has adjusted to tariff-based bidding process?

Slowly tariff-based bidding in the transmissions sector will stabilise. Earlier there were 16 to 17 players, which have now been reduced to three to four. Initially, a lot of people will come and go. But the serious players will remain. Tariff-based bidding is good for everybody be it public or private sector.

What according to you are the major challenges in adding transmission capacity in the country?

Right of way and land are the only two major challenges and they need to be resolved. It is the only persuasive method that is why we are successful compared to others as the PowerGrid has the ability and skills to get right of way and land. We do not face much problem in this regard.

Despite power availability, distribution utilities are not buying and are instead going in for load shedding…

The fundamental principle that is business has to be done on commercial principles. The discom finance has to be improved at the earliest. As the paying capacity is not available, discoms are not able to buy power. Every unit discom lose 80 to 85 paise per unit. Therefore, that is the issue that needs to be addressed on a priority basis.

Can you give an update on your capex plan?

We have a targeted set of numbers — Rs 1.10 lakh crore in the 12th Plan. We have already done Rs 65,000 crore and we are confident that in the rest of the time we will do the balanced capex. We are doing a controlled capex.

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First Published: Aug 13 2015 | 12:45 AM IST

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