Bulk Power Transmission Firm To Be Set Up

The country's first private bulk power transmission company is being finalised in Karnataka. The Karnataka Electricity Board (KEB) is setting up a joint venture company to link Cogentrix's 1000 MW project and other proposed power plants to the grid.

KEB has planned the joint venture along with Infrastructure Leasing and Finance Services (IL&FS) and other financial institutions for bulk transmission of power from upcoming projects in Mangalore to Bangalore, a distance of 300 kms approximately. KEB, IL&FS and other FIs will jointly hold 50 per cent stake in the company.

For the balance, international as well as national private companies are planned to be roped in as stake holders. However, global bids will be invited for private sector participation.

 

KEB hoped the private sector participants would be technical partners a source said, adding, it could also be Cogentrix itself.

IL&FS senior vice-president Hemang Raja told Business Standard: An investment banking report is under preparation for exploring the economic viability of such a venture. The report is likely to work on the assumption of only the Cogentrix project.

A KEB source said: Transmission charges should make the (Cogentrix) project viable. Cogentrix unit cost will be fixed soon and a realistic estimate of the viability of the transmission joint venture can be made then.''

According to Raja, viability of evacuation projects is dependent on power availability and not on what you transmit. The basic principle, analysts say, is: the more the load one gets to carry, the better''. Thus, the feasibility of the project will increase with the setting up of other proposed projects in Mangalore and en route Bangalore.

Raja said private involvement in the power sector has been restricted to putting up projects and distribution. A major area like power evacuation has not been considered as yet, whereby the power produced is brought to the network. This will be the first venture that contemplates power grid jobs through private participation,'' he said.

Apart from the Cogentrix project, Mangalore will be the site for Nagarjuna group's proposed 1000 mw and RPG's 300 mw projects. KEB will continue to hold the prerogative for retail distribution.

While the joint venture is being finalised, a legal opinion has been requisitioned by KEB and IL&FS over the constitutional validity of such a private evacuation company under the Electricity Supply Act.

Both KEB and IL&FS officials said: ``We are assuming that ESA will not impede the establishment of the company. Prima-facie, we feel the state government is empowered under the Act to authorise the state electricity board to take whatever decision it deems fit on the matter.''

According to KEB's estimates, an investment of Rs 500 crore will be required for both transmission of new projects and upgradation of existing transmission.

The Karnataka state electricity board wants to target transmission as a priority area as there is 7500 mw of generation in the pipeline.

National estimates of transmission investment are $ 180 billion for new investment and $ 500 billion for upgradation.

A power ministry report suggests Rs 75 lakh per mw is the approximate cost of transmission.