Govt gets it right with pvt transmission

Private sector participation is the need for two reasons. Investment is transmission has not been enough. While each rupee invested in generation requires a similar investment in transmission, only a small percentage was put into transmission. The Rajadhyaksha Committee had suggested that the investment in generation, transmission, distribution and rural electrification should be in the ratio of 4:2:1:1. Which means that half should be generation while the other in taking the power to each corner of the country. But in practice investment in transmission and distribution has been only 27 per cent. As a result there is a severe gap in transmission capacity in the country. And since the Government does not have the money for it, private investment has been roped in to create the country’stransmission network.

The other reason for inviting the private sector is to reduce the transmission losses suffered by the country. The country wide average for losses is 22.27 per cent. This is estimated to be about 2700 MW every year which translates to Rs 72-108 billion. While theft is tha main reasons for the loss, other issues like low maintenance, frequent breakdowns and faulty grid management has also contributed. The private sector is expected to bring in the latest technology which reduces losses and also do an effective check on power theft.

Transmission include three distinct areas of activity. The first is ownership which includes construction, maintenance and insurance of transmission lines. The second is system planning and operations which means juggling the demand of power in different areas. And finally there is trading of electricity. Worldwide this is bundled together and managed by the same company. But the model adopted in India is slightly different.While the private sector will beallowed to set up the lines, it will operate only as a licensee. The management of physical evacuation of power will be done by the Government owned agencies. At the central level Power Grid Corporation of India and the Regional Load Despatch Centres will handle it, while at a state level the State Electricity Boards will manage the power.

“This is logical and acceptable to us. The ownership of assets does not matter as long as they are controlled and available for use by the Government,” says Woods. His company National Grid itself is a creation of the privatisation process in UK. It was created in 1990 after UK’s Central Electricity Generating Board was restructured and privatised. National Grid administers 8000 million pounds of electricity trading every year in England and Wales.

Since 1993, it has been working in India with Power Grid Corporation under a utility collaboration agreement. It has also offered consultancy for Orissa’s power sector reforms and has entered into a joint venture with theKarnataka Electricity Board for a 250 km 400 kv line for evacuating power from Mangalore. This is the first private sector electricity transmission project in India.

Once the Bill is enacted the central or state regulator will grant the transmission lincenses after discussing with state and central PSUs. State regulators will come into the picture for lines which are within teh states while the central regulator will license for inter-state lines. While the Bill has clared the way for private investment lot of details still need to be worked out. For instance the Government has to decide the parameters of competitive bidding. Whether the bidders will offer the lowest cost of setting up the line or will it be based on the wheeling charges. Norms for this have to be fixed. In theory it could happen like this. The private operator will offer the minimum charge from the Government. This will depend on the cost of erection, construction and reliability of lines.