PowerGrid may lose ownership of the country’s electricity transmission network

NEW DELHI: PowerGrid Corp may soon lose ownership of the country’s electricity transmission network as the power ministry has approached Cabinet with a proposal aimed at attracting private investment in the transmission space. As per the plan, the state-run company would continue to develop projects, but would not own them. The ministry has completed inter-ministerial consultations and moved the proposal to hive off ownership of transmission projects from PowerGrid Corp, a government official said. The government had in 2014 separated management of electricity grids from PowerGrid.
“The proposal provides for the creation of an independent entity that will own, manage and regulate power transmission lines,” the official said on the condition of anonymity. “Power Finance Corp and Rural Electrification Corp will continue to bid out transmission projects and PowerGrid will participate to bag projects.”

The government will have limited flexibility to award transmission projects of strategic importance and related to energy security to PowerGrid on nomination basis.

Power Secretary PK Pujari declined to comment. He, however, said the ministry had decided to reduce the role of PowerGrid Corp to a developer of transmission lines that will compete with private companies to bag projects. “It is an important reform to foster healthy competition in the power transmission sector. It will give more comfort to private sector companies that their issues will be fairly addressed,” Pujari said. PowerGrid Corp is responsible for wheeling of electricity generated in the country. It also plays an active role in planning and operation of transmission network.

Concerns on conflict of interest and level playing field for private companies have been raised as the state-run company owns the country’s transmission system, operates it and participates in tariff-based bidding to bag projects. Thermal power and transmission projects in India are being awarded only through tariff-based competitive bidding since 2011, except for some projects of critical nature.