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The government has awarded a critical power transmission corridor project, connecting power-starved southern states to thermal power rich, western India, to Power Grid Corporation. This has been done by "nomination", shunning private sector investment through an auction.
Officials in the Central Electricity Authority (CEA), Power Finance Corporation and Power Grid confirmed the development.
They added the decision was based on requests by the southern states that the central government award to Power Grid, the high voltage direct current transmission line connecting Chhattisgarh and Tamil Nadu.
The ministry of power had put up eight transmission contracts with a total investment of Rs 53,000 crore for rate-based global competitive bidding in September.
Later, it decided to allot the largest project of Rs 26,820 crore to the state-owned transmission company and central transmission utility.
The Central Electricity Regulatory Commission (CERC) had in 2011 ordered the power transmission projects to be awarded through rate-based competitive bids, as was the case with generation projects.
"In the annual power ministers' conference in New Delhi on September 9, the southern states requested the central government to allot the project to Power Grid. Especially Tamil Nadu, which wants this project to come up as soon as possible. It has been insisting on giving the project to Power Grid," said a senior government official.
R Viswanathan, Tamil Nadu's minister for electricity, prohibition and excise, in his speech at the conference, said, "To evacuate the power available with the pithead power stations in Chhattisgarh, work on the line from Chhattisgarh to Tamil Nadu needs to be entrusted to Power Grid, in view of its expertise and implementation capacity."
Government officials said Power Grid was the only company with expertise in such lines.
They cited the recently commissioned Raichur-Solapur transmission line. This 760 kV-460 km line, the first one connecting the southern region with western India, was commissioned this year in February.
Executives at private power companies, however, said there were several companies in India like Alstom, Siemens and Larsen & Toubro which offered high voltage direct current transmission lines. The Adani group, too, has installed a 500 kV (2,000 MW capacity) line from Mundra to Mohindargarh in Gujarat.
Companies in the race for the project are irked at this 'unlawful' move. Reliance Power, Tata Power, Sterlite Energy, Lanco and Larsen & Toubro were planning to bid for this project.
Power sector experts said the decision could have been taken due to the size of the project.
The Raigarh-Pugalur line will have a capacity of 6,000 MW and cover 2,000 km.
"Nomination of power transmission projects is against the National Tariff Policy and the Electricity Act, apart from the CERC regulations. Tariff-based bidding was introduced to make the sector cost-efficient and ensure timely delivery. This is a setback to power plants in Odisha and Chhattisgarh and consumers in Tamil Nadu who could have availed cheap power at the earliest," said an executive with a private transmission company.
A senior CEA official said the other seven projects would be allotted through bidding. The cumulative cost of these projects is less than the one awarded to Power Grid.
Power transmission was opened to the private sector in 2010, with the award of the western regional system strengthening project to Reliance Infrastructure and the east-north interconnection line to Sterlite Energy.
