In recent weeks, the provisional results of four mega transmission schemes, to be awarded on tariff-based competitive bidding, were announced. The four projects in question are Chhattisgarh-A, Chhattisgarh-B, Sipat and Maheshwaram. As many as three projects went to Adani Group while Sterlite Grid bagged one. This takes the total number of schemes awarded on tariff-based competitive bidding (TBCB) mechanism, to 23. The aggregate results throw up some interesting observations.
Adani Group, which was never an active participant in interregional transmission schemes bid, marked its entry through some aggressive bidding. With three schemes now under its fold, it can be regarded as an important player. Sterlite Grid has become the biggest player in terms of number of projects in the interregional power transmission industry under the TBCB regime.
Aggressive bids: Adani Group won the Chhattisgarh-A, Chhattisgarh-B and the Sipat transmission projects for which PFC Consulting Ltd (a subsidiary of Power Finance Corporation) was the bid process coordinator. Although PFCCL officials maintained that the formal award of the project was pending, it is reliably learnt that Adani clinched the Chhattisgarh-A project quoting a bid that was 10 per cent lower than the next-best bid, which was that of Sterlite Grid. The Chhattisgarh-A project, to be implemented by special purpose vehicle Chhattisgarh WR Transmission System Ltd, is understood to be technically complex as it involves serious right-of-way issues. The extent of complexity can be gauged from the fact that PGCIL did not submit its price bid despite being technically qualified. In fact, this was the first time that PGCIL did not submit its price bid for any project since the onset of the TBCB regime in January 2011. For the Chhattisgarh-B project, Adani’s bid was 15 per cent lower than the next best (that of Sterlite Grid) while for the Sipat project, it was 14 per cent lower that the second-best quote. The Chhattisgarh-B project will be implemented by special purpose vehicle Raipur-Rajnandgaon-Warora Transmission Ltd while Sipat Transmission Ltd will be the project developer for the Sipat scheme.
By winning the Maheshwaram project, Sterlite Grid now has a portfolio of seven projects making it the biggest player in the interregional power transmission schemes, edging out second-seeded PGCIL that has six. Adani Group, albeit with three projects, ranks at No.3 with a 13 per cent market share.
Other developers in the fray include Reliance Infrastructure and Essel Infraprojects (with two projects, each); and L&T Infrastructure Development Projects and Techno Electric, each with one project. It is worth observing that in the 23 projects, there is only case of consortium-based approach. The case in point is the Raichur-Solapur project awarded to a consortium of BS Ltd, Patel Engineering and Simplex Infrastructures, in January 2011.
Even though PGCIL’s market share is relatively low, at 26 per cent, it does benefit from the fact that it can be “nominated” to develop projects. In projects of high importance where gestation periods are compressed or where technical complexity is high, the power ministry can decide against the tariff-based competitive bidding route and nominate project implementation agencies, typically PGCIL. Effective January 5, 2011 though, all new transmission lines have to be build using the tariff-based competitive bidding mechanism, according to extant guidelines. A recent case in point was the Raigarh-Pugalur transmission scheme that was awarded to PGCIL, on nomination basis, due to technical complexity and compressed completion schedule. This 800kV HVDC bipolar line traversing 2,000 km from Raigarh in Chhattisgarh to Pugalur in Tamil Nadu is designed to have a transmission capacity of 6,000 mw. The project, costing around Rs.15,000 crore, also envisages setting up of an inverter station of 4,000 mw at Pugalur in Tamil Nadu and another one of 2,000 mw at Madakathara in Kerala.
Though formal TBCB guidelines became effective on January 5, 2011, the mechanism was deployed even earlier, in five projects. (See the first five given the table alongside.) Out of these, two were won by Reliance Infrastructure. However, both the projects are facing delays and are also under litigation. The developer has not expressed interest in bidding for any subsequent project.
Overview: Currently, Sterlite Grid is the most successful developer having won seven projects with three already completed or very close to completion. For the new entrant Adani Group, power transmission complements its activities in the power generation space. Essel Infraprojects, part of the Essel Group, is a new player in private power transmission albeit with sufficient exposure in the power distribution space. Techno Electric Engineering, which has one project so far, has not been bidding actively in recent projects. Leading power transmission contractor, Larsen & Toubro, has already turned developer with one project and has been participating in recent projects as well. Another major contractor that has been submitting its bids but has yet to mark its presence in the interregional transmission space is Kalpataru Power Transmission. The company, however, has won a intrastate concession in Haryana, in association with Techno Electric. The interregional power transmission space has yet to see the emergence of a multinational developer. However, Spanish company Isolux Corsan that has won a concession in the intrastate transmission space has been participating actively in recent interregional schemes.