Power Transmission To Be Off Limits For Firms Without Foreign

The Sankaraguruswamy Committee on power transmission is to recommend stringent eligibility criteria for developers, in a move that is seen to invite only serious players for power transmission projects.

The eligibility criteria would preclude the direct entry of Indian companies barring the PowerGrid Corporation into the sector except through joint ventures with experienced foreign partners. Even companies like BSES, Tata Power and CESC do not meet the criteria.

The six-member committee has also decided that transmission tariffs would be a flat rental instead of the capacity-based charge adopted for the Mangalore evacuation project.

As per the eligibility criteria outlined by the committee, a transmission project developer should have operated 3,000 km of transmission lines, wheeled 3,000 kilo volt-ampere (kVA) of power and have a minimum experience of three years.

 

Once these eligibility criteria are implemented , an Indian investor would have to tie-up with a foreign transmission developer (with the above mentioned experience) in order to bid for the project.

As opposed to tariffs being based on the amount of power (energy) being transferred through a transmission line, transmission charges are to be based on rentals which implies that the developer of a transmission line would charge a lump-sum amount to the users on an annual or a monthly basis.

The bidders for any transmission project would be selected on tariff-based global competitive bidding. The tariff that the bidders quote would be equivalent to the amount that the developer would charge the users of his line which, in effect, is rent charged for the use of his line.

The developer of the project would only build and maintain the transmission line while the load despatch centre or the state electricity board would operate it.

It is for this reason that rental or flat rates are being used to compute transmission tariffs. After the construction of the project, the developer of the transmission line would be involved only with line maintenance while the operations (i.e. the amount of power flow) would be overlooked by the load despatch centres.

As power transmission has no variable costs, the only costs incurred by the developer would be fixed in nature and would include depreciation, operation and maintenance, tax , interest etc.

A flat charge would imply that the government need not prescribe any return on equity for transmission developers as was done for power generators.

The Committee is planning to fix the availability (the extent of time the line can transmit power) at 98.5 per cent for the developer to recover his fixed costs.

There would be incentives for achieving higher availability and penalties for going below the 98.5 per cent level.

The committee is also planning to put the capital costs (which is a major component of the tariff) of the bidders under scrutiny in order to avoid padding.

While the transmission project would be built and maintained by the developer, the Central Electricity Authority identifies the transmission project and recommends the capacity (the amount of power that would flow) for the line and the location.

Terms of endearment

The company must have a minimum experience of three years in power transmission Must have operated 3,000 kms of transmission line Wheeled 3,000 KVA of power