Clipping Power Grid’s CTU role to level the playing field

Power Grid Corporation, in its role as CTU, was responsible for wheeling of power generated by electricity producers and playing an active role in transmission systems planning and operations. It has also been entrusted with the additional role of coordinating the wheeling of electricity from power generators and state utilities using the inter-state transmission infrastructure.

However, the fact that PGCIL as a transmission company is the largest player in the sector and also participates in tender-based bidding for transmission projects in direct competition with private players raised a serious issue of conflict of interest. Especially as the award of transmission projects since December 2011 has to be mandatorily done on the basis of competitive bidding, except for those entailing ‘strategic importance or time bound delivery’ and can be handed out to PGCIL on a nomination basis. The move assumes greater significance in light of projects worth Rs 1 lakh crore expected to be tendered over the next 12 months.

Monday’s meeting, according to officials involved in the exercise, took place in the Central Electricity Authority. PGCIL is learnt to have abstained from the meeting. As per the Electricity Act, the CTU function can be given to any government company, which basically implies that hiving off the CTU role from PGCIL does not require an amendment in law.

Earlier, nearly two-and-a-half years after the electricity grid collapse in July 2012, the most concrete measure prescribed in its aftermath to bolster grid security and prevent a repeat of the crisis was set in motion, with the power ministry clearing a proposal to hive off the Power System Operation Corporation Ltd (POSOCO) – the operator entrusted with managing one of the world’s largest integrated grids — into an independent company. POSOCO was earlier functioning as a subsidiary of PGCIL.

Even as the decision to hive off POSOCO was taken in the immediate aftermath of the grid collapse in July 2012, the proposal continued to hang fire for this long on account of inter-ministerial wrangling, with opposition to the move from the erstwhile Planning Commission, law ministry and the Department of Public Enterprises. The reason cited against the proposal included the need to create “such a small Schedule A company with practically no turnover” and on how “transmission was not a very important element in electricity costing” and therefore did not yet need another PSU.