Norms for pvt firms in power projects by March-end

The power ministry will issue guidelines for private sector investment in national grid power transmission projects by March-end.

The move, first mooted in the Electricity Act 2003, aims at ensuring competition and private participation in the national power transmission backbone.

The Prime Minister's Energy Coordination Committee (ECC) has observed that lack of such guidelines is among the bottlenecks in the energy sector.

Accordingly, the power ministry is preparing the final guidelines to promote competition and private participation. "Failure to do so will be a disincentive," the committee observed.

A draft of the guidelines has already been circulated for public discussion. An empowered committee is to identify projects for development and will invite bids for the selection of a developer.

The committee will also facilitate finalisation and signing of transmission service agreements (TSA) between the developer and the utilities concerned.

The selection of developer for identified projects will be through tariff-based bidding for transmission services. Central transmission utilities and joint venture companies will also be eligible to bid to ensure sufficient competition.

TSA will include an arrangement on the lines of payment security for independent power producers based on revolving letter of credit of required amount and escrow arrangement.