'Deviation from TCBC to hurt investment in transmission sector'

Any move to exempt modernisation or expansion works at existing substations from competitive bidding will disincentivise future investments in power transmission business, according to two leading industry bodies.

In separate letters to Power Ministry, Assocham and CII have also pitched for bringing interconnection projects with neighbouring countries under tariff based competitive bidding (TBCB) process.

Their concerns came weeks after National Committee on Transmission (NCT) considered a CEA proposal to exempt modification, augmentation or upgradation works in existing substations from competitive bidding and bring them under Regulated Tariff Mechanism (RTM).

The Central Electricity Authority's (CEA) proposal of awarding transmission projects through RTM ignored the competitive nature of the Electricity Act, Assocham said in the letter.

"The suggestion is against the principles of tariff policy and also violates NCT's terms of reference, according to which it needs to make recommendations as per the existing tariff policy. The proposal is baseless and without any economic or practical thought," it added.

The proposal also said that cross-border interconnections should be done under cost plus route and should be provided exemptions from competitive bidding in view of strategic importance.

This move will undermine India's potential to become an inter-regional hub for exporting power. Therefore, only limited cross border interconnections which are strategically important should be considered for RTM and the rest should be awarded through TBCB, Assocham added.

Echoing similar concerns, CII said currently there are some grave issues in the award of transmission projects through RTM as against the TBCB process.

"The tariff discovered through TBCB route has witnessed a reduction of 30-40 per cent compared to the RTM norms of cost plus route. All such efforts will be substantially lost if the projects are routed through RTM without following the tariff policy," it said.

It also demanded reconsideration of notified transmission projects/schemes under TCBC.