In the foreseeable future, interstate power transmission projects worth over Rs.5,000 crore are coming up for award on the tariff-based competitive bidding route. This gives ample opportunity for existing developers to consolidate their position and also to emerging Indian and foreign companies to venture into power transmission development. A story by Venugopal Pillai.
In the coming months, mega transmission lines worth over Rs.5,000 crore are likely to be awarded, according to information available from Central Electricity Authority. As of June 2017, six interregional power transmission projects under the tariff-based competitive bidding (TBCB) route were under various stages of bidding and were likely to be awarded to selected developers in the near future. As per the standard procedure, bid process coordinators—subsidiaries of Rural Electrification Corporation (REC) and Power Finance Corporation (PFC)—have already incorporated project-specific SPVs that will be transferred to the selected developer. The developer will implement the project on build-own-operate-maintain (BOOM) basis under a concession period of typically 35 years. [See table]
A significant project amongst the six under bidding is the Dinchang transmission scheme that envisages setting up evacuation infrastructure for upcoming hydropower projects in Arunachal Pradesh. This northeastern state is endowed with hydropower potential of over 50,000 mw that represents around a third of the country’s total. Though the overall progress of hydropower projects in Arunachal Pradesh has been slow, the recent years have seen transmission connectivity being established for six projects, with aggregate capacity of over 12,300 mw. The Dinchang transmission scheme, with an estimated cost of Rs.1,124 crore, aims to evacuate electricity through 400kV and 220kV schemes.
The largest scheme, in terms of capital outlay, is the Eastern Region System Strengthening Scheme-XXI, which will take shape in Bihar. This eastern state is estimated to have a load demand of 11,000 mw by FY22, based on current studies. Estimated to cost Rs.1,321 crore, ERSS-XXI, among other project elements, aims to set up two substations (at Sitamarhi and Saharsa) in north Bihar and one at Gaya in south Bihar.
Another significant project is the 765kV interregional corridor linking the north and the western regions. To be developed by project special purpose vehicle WR-NR Power Transmission Ltd, the Rs.916-crore project envisages a 765kV double-circuit line between Vindhyachal Pooling Station (Madhya Pradesh, western region) and Varanasi (Uttar Pradesh, northern region.)
| TBCB transmission schemes under bidding | ||||
| Project SPV | State/Region | kV | BPC | Cost |
| (Rs.crore) | ||||
| Dinchang Transmission Ltd | Arunachal Pradesh | 400/220 | REC | 1,124 |
| ERSS XXI Transmission Ltd | Bihar | 400 | REC | 1,321 |
| WR-NR Power Transmission Ltd | West & North India | 765 | REC | 916 |
| Goa-Tanmar Transmission Project Ltd | Goa | 400/220 | PFC | 863 |
| Fatehgarh-Bhadla Transmission Ltd | Rajasthan | 400 | PFC | 536 |
| Shongtong Karcham-Wangtoo Transmission Ltd | Himachal Pradesh | 400 | PFC | 318 |
| Total for six projects | 5,078 | |||
| Source: CEA | ||||
The China angle
Though details of the bidders of these six projects are not available, it is independently learnt that China is eyeing opportunities in the Indian power transmission development space through some of these six projects. A consortium of CLP India Pvt Ltd and China Southern Power Grid International (HK) Company Ltd has submitted its bid for three schemes represented by WR-NR Power Transmission Ltd, Fatehgarh-Bhadla Transmission Ltd and ERSS XXI Transmission Ltd. CLP India Pvt Ltd is incidentally India’s only independent power producer of Chinese origin and operates the Paghuthan gas-based power plant (655 mw, Gujarat) and the Jhajjar coal-fired power plant (1,320 mw, Haryana), apart from wind and solar power assets. The involvement of Chinese companies in the power transmission development space was also discussed in Parliament recently. It should be noted that in FY15, CLP India Pvt Ltd had independently bid for some transmission schemes under the TBCB regime but did not clinch any.
TBCB projects pending award
One project, for which the letter of intent was issued to the developer, is still pending award because of non-signing of the transmission service agreement (TSA). In October 2015, the letter of intent of the transmission scheme associated with NTPC’s 2×660-mw Tanda power project in Uttar Pradesh was awarded to Essel Infraprojects Ltd. However, the project SPV, Tanda Transmission Company Ltd, has not yet been transferred to Essel because the TSA with long term transmission customers (LLTC) has not yet been signed. The transmission scheme, with an estimated cost of Rs.245 crore, envisages a 400kV 173-ckm double-circuit line from Tanda to Sohwal and a further 400kV 176-ckm double-circuit line from Sohwal to Lucknow. According to information available, there are 11 long-term transmission customers for the Tanda transmission scheme. Out of these, while eight have signed the TSA, three, namely Punjab State Power Corporation Ltd, Tata Power Delhi Distribution Ltd and BSES Rajdhani Power Ltd, have not yet signed the transmission service agreement. These three power utilities, in turn, have cited issues in their power purchase agreements with NTPC as the reason for delay in the TSA signing. The issue of non-signing of the TSA by these three LLTCs has been raised by bid process coordinator PFC Consulting Ltd in various meeting with Central Electricity Authority and the Union ministry of power. Going by the current situation, the Tanda transmission scheme, might be delayed as the scheduled commissioning date is January 2019.
The TBCB story so far
So far, under the tariff-based competitive bidding (TBCB) route, a total of 37 projects have been awarded to various developers. This means that technically, the project SPV in 37 projects has been transferred to the developer selected on the basis of tariff quoted. In just once case, the project has been scrapped by the regulator Central Electricity Regulatory Commission (CERC) citing reasons of redundancy. The project in question is the transmission scheme associated with IPPs of Vemagiri (Package A). The project was awarded to Power Grid Corporation of India Ltd but CERC in its ruling of April 2015 pronounced that the project was not required and subsequently even withdrew its regulatory approval to the project.
This leaves 36 “live” projects that have been transferred to selected developers. In terms of number of projects, Sterlite Grid has been the most successful having clinched 11 projects. Power Grid Corporation of India Ltd follows with nine projects. Essel and Adani Groups have four projects each, while Kalpataru Power and Reliance Power (Anil Ambani Group) have won two each. The remaining four projects have gone to Larsen & Toubro; Techno Electric; a consortium of BS, Simplex Infrastructures and Patel Engineering; and Spanish company Instalaciones Abensa.
In terms of their current status, these 36 projects include 11 fully commissioned ones. Four projects have been partly commissioned while 15 are under construction. Three others are newly awarded and are yet to see the onset of physical construction.
Unfortunately, in the case of three projects, work has stalled due to concerns associated with the selected developer (transmission service provider). Two of these projects (North Karanpura and Talcher-II schemes) are with Reliance Power Transmission Company Ltd. In both cases, has sought for revision in tariffs citing that there was a delay in granting pre-project clearances. The matter is currently under litigation. Meanwhile, Power Grid Corporation of India has sought that the two projects be transferred to the company for construction under the “cost-plus” method. The matter is currently with the Appellate Tribunal for Electricity.
The third case is the transmission scheme associated with DGEN power plant of Torrent Power. The developer, a Spanish company Instalaciones Inabensa SA, is seeking to exit the project citing financial difficulties.
Conclusion
In the coming months, transmission service providers have business opportunity in the pipeline with Rs.5,000 crore of mega transmission lines coming up for award. After a hesitant start, the TBCB mechanism in interstate power transmission is seen to be picking but the participation is still not broad-based. Power Grid Corporation Ltd, in the public sector, and Sterlite Grid in the private sector, have been most successful. Participation by foreign companies is still awaited. It will be of interest to see whether the sole Chinese bidder (a consortium of CLP India and China Southern Power Grid International) manage to clinch any of the three projects that they have bid for. Whosever gets the mandate to develop the projects, EPC contractors have a potential order pipeline on hand, apart from an opportunity to themselves groom into transmission service providers.
