Government steps up power grid expansion

To open and expedite market opportunity of Rs 1 lakh crore

The central government has accelerated development of power transmission networks to meet the rising electricity demand from various parts of the country. Along with states that would offer transmission projects, the Centre is looking to unleash investment opportunity of nearly Rs 1 lakh crore for the sector.

To surpass the target of 23,000 circuit kilometre (ckm) during 2016-17, the Union power ministry has expedited work on the long-term ‘20-year Perspective Plan’ for power transmission. 

Tamil Nadu, Karnataka, Rajasthan, Madhya Pradesh and Haryana would offer power transmission projects through the bidding route, which forms the part of their ‘24x7 Power for All’ plans.

The Centre and states offer transmission projects through various modes — via cost-plus regime to state-owned Power Grid Corporation of India (PGCIL); through tariff-based competitive bidding (TBCB) route to private players; and engineering, procurement & construction (EPC) contracts to private firms.

This comes at a time when the share of renewable energy is increasing in the grid along with the demand-supply mismatch. At the same time, private investment in power transmission is still tepid due to the slow pace of project approval and award. 

“Be it EPC contracts, TBCB, sub-contracts for government projects... all are aimed at speeding infrastructure development and inviting investment. There is no demarcation over whether the project is built through private investment or by a public-sector enterprise — it all boils down to creating business opportunities for the whole supply chain,” said a senior power ministry official. The official added that major growth would come from intra-state and last-mile projects. “We are in discussion with all the states to promote TBCB to invite more competition and investment.” 

Major projects that are in the pipeline include those for boosting inter-regional capacities and strengthening last-mile connections. The Southern region’s power transfer capacity would be increased by 625 megawatt (Mw) by this December and 18,400 Mw by 2019-20. Its current capacity is 5,900 Mw. For West to North, the power transfer capacity would be increased to 20,000 Mw by 2019-20. This would correspond to the wind power projects that would be auctioned in this region. 

These projects would be built under different modes, including TBCB. In FY16, the country added a record 28,000 ckm of transmission lines. The total investment envisaged in the 20-year Perspective Plan is Rs 2.6 lakh crore during the 13th Plan period. According to the current draft of the Plan, Rs 1.6  lakh crore investment in transmission would come from states and Rs 1 lakh crore from PGCIL. The government is planning to increase the size of projects and scope of work in transmission to prevent congestion in the network. Inter-state lines with 56,000 Mw capacity will be built by the end of the 13th Plan period.