Central transmission utility Power Grid Corporation of India (PGCIL) has made its entry as a developer of transmission projects awarded on tariff based competitive bidding. PGCIL recently won two projects that it will develop on BOOM basis under a concession period. This is the first time that PGCIL is seeing itself competing with other contenders—very unlike its earlier role where it was the de facto agency for all inter-regional transmission projects.

In late March, PGCIL won the rights to develop the transmission system associated with upcoming private power generation projects at Nagapattinam and Cuddalore in Tamil Nadu. The transmission system comprising 765kV single and doublecircuit lines traversing Tamil and Karnataka will be developed by PGCIL in 36 months. The project was awarded by Power Finance Corporation of India, the nodal agency. As per the guidelines, PGCIL has taken over the special purpose vehicle Nagapattinam - Madhugiri Transmission Company Ltd that will establish the system on BOOM basis.

Later in mid-April 2012, PGCIL outbid private developers to clinch the Vemagiri (Package A) transmission system awarded by Rural Electrification Corporation Ltd. The 765kV double-circuit transmission system will be built in Andhra Pradesh and will help evacuation of 5,400 mw of gas-based power generation capacity coming up in the Vemagiri area, all to be fed through gas from the Krishna-Godavari basin. Long term agreements for gas supply have already been entered for 5,100 mw of capacity. The Vemagiri (Package A) project will facilitate the transfer of power to the southern region. The special purpose vehicle Vemagiri Transmission System Ltd, acquired by PGCIL on April 18, 2012, will develop the transmission system in 36 months.

Background: In 2006, the Union power ministry decided to build a series of mega power transmission projects with private sector participation. This was done with a view to encourage competition amongst developers and also to supplement the ongoing efforts of PGCIL. Two nodal agencies— first Rural Electrification Corporation (REC) and then Power Finance Corporation (PFC)—were appointed. After a rather hesitant start, the first project was awarded in October 2009.

As of April 20, 2012, a total of eight projects were awarded-four each by the two agencies (see table.) The successful developers include names like Reliance Infrastructure (Anil Ambani Group), Sterlite Technologies (Vedanta Group), a consortium of Patel Engineering, BS Transcomm and Simplex Infrastructures; and now, PGCIL. Sterlite has been the most successful in winning three projects.

ULTRA-MEGA POWER TRANSMISSION PROJECTS AWARDED
Month	SPV	Agency	kV	Rs.crore	km	Developer(s)
Oct 2009	East North Interconnection Co Ltd	PFC	400	800	450	Sterlite Technologies
Apr 2010	Talcher-II Transmission Co Ltd	REC	400	1,400	592	Reliance Power Transmission
May 2010	North Karanpura Transmission Co Ltd	REC	400	2,700	1,045	Reliance Power Transmission
Jan 2011	Jabalpur Transmission Co Ltd	PFC	765	1,300	635	Sterlite Technologies
Jan 2011	Raichur Sholapur Transmission Co Ltd	REC	765	300	210	Patel+Simplex+BS Transcomm*
Feb 2011	Bhopal Dhule Transmission Co Ltd	PFC	765	900	1,000	Sterlite Technologies
Mar 2012	Vemagiri Transmission System Ltd	REC	765	1,300	250	Power Grid Corporation of India
Apr 2012	Nagapattinam-Madhugiri Transmission Co Ltd	PFC	765	1,025	250	Power Grid Corporation of India
*Patel Engineering, Simplex Infrastructures, BS Transcomm;PFC=Power Finance Corporation Ltd, REC = Rural Electrification Corporation Ltd

Both REC and PFC are in the midst of awarding more projects in the months to come. For instance, REC is working on two more packages (B and C) of the Vemagiri system, and so is PFC that is working one more segment of the Nagapattinam/Cudddalore system. These three transmission systems are designed to operate at 765kV levels and will together entail investment of around Rs.4,160 crore.

Speaking to Electrical Monitor, a highly-placed official of nodal agency REC said that Vemagiri (Package C) is also linked to evacuation of power from gas-based power plants in Andhra Pradesh to consumption centres in western and northern India. However, since gas allocation is yet uncertain, this transmission line may take some time to get into the bidding stage. However, Vemagiri (Package B) is will be taken up and is likely to be bid out this fiscal year. REC is also working on another transmission system called Hinduja (Package C), the official said. This system will involve power evacuation from the 1,040-mw coal-fired power plant of Hinduja Power Corporation in Andhra Pradesh.

Inter-regional transmission lines have attracted interest from not only Indian companies—both public and private-but also multinationals. According to information available with Electrical Monitor, Spainbased companies like Elecnor and Cobra y Instalaciones have been bidding aggressively for these transmission projects. Apart from inter-regional projects, several states have also initiated tariff-based bidding for intrastate projects. Haryana, Rajasthan and Uttar Pradesh are few in question, with Rajasthan having awarded the highest number of projects, at three.

The January 5, 2011 cutoff

Although PGCIL's involvement was not envisaged when the mega transmission scheme was introduced, the scheme has acquired a new complexion due to another set of guidelines issued last year. With effect from January 5, 2011, the power ministry made it mandatory that all power purchases should be governed by tariff-based competitive bidding. This virtually put an end to the practice of setting up projects through the MoU route or through nomination basis. It may be recalled that Central agencies like NTPC and PGCIL had come under flak for allegedly having rushed through their agreements before the deadline. NTPC, for instance, formalized a series of power purchase agreements while PGCIL expedited the signing of bulk power transmission agreements just before the deadline of January 5. 2011. It is therefore alleged that a large chunk of power purchase pacts were signed unilaterally by Central agencies with no competition from private players.

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