PowerGrid to lose central transmission utility status

Transmission unit to be a separate entity

In a milestone move, the government would hive off the central transmission utility (CTU) function of state-owned Power Grid Corporation Limited (PGCIL). This follows taking away of grid management from the Union government-owned transmission behemoth.

"We have already decided to do that (separate CTU from PGCIL). All the study and paperwork is going on. I agree that CTU should be a separate entity. PowerGrid acted like a support to these institutions till they become strong and centralised," Union power minister Piyush Goyal told Business Standard.

A new company called Posoco was recently made the grid manager, separating it from PowerGrid.

PowerGrid as a CTU was responsible for wheeling of power generated by producers and involved in planning transmission systems and operations.

It also has the additional role of collection from power generators, state electricity boards, etc, using the transmission infrastructure. The CTU retains its share and distributes the rest to other private licensees.

But PowerGrid as a transmission company also participates in tender-based competitive bidding for projects with private players. This conflict of interest has faced repeated criticism from the industry.

A report in 2013 on power transmission said as it is also a CTU, "PowerGrid can make sensitive information available to it without much difficulty.... it is a tariff rate collection agency - this confers additional powers to the company to potentially arm-twist private players."

Goyal, however, said this move was taken to further strengthen the state transmission giant.

"PowerGrid is a strong company. In times of emergency - whether it's HudHud, crisis in Nepal or Jammu & Kashmir, they have come to the rescue. We have to strengthen the company. PowerGrid is not shy of competition. They can stand on their own and bid on their feathers. I am trying to create a level playing field across the country and am in continuous dialogue with companies in this space," said Goyal.

After 2011, procurement of transmission has been made mandatory on competitive bidding, except for projects of 'strategic importance/time bound delivery.' These are given to PGCIL on a nomination basis.

Opening the transmission sector further, Goyal said projects worth Rs 1 lakh crore would be tendered in six months to a year.

"Even in terms of environmental clearances, there was a separate dispensation for private (companies). We have made it the same now and many other suggestions that came from them are under processing to help the private sector active in transmission. The sector helps us to benchmark government companies better and improve their efficiency and that is in the nation's interest, to keep costs low," said Goyal.