The interstate transmission system (ISTS) scheme housed under “Khavda IV C Power Transmission Ltd” and which was recently won by Sterlite Power has seen a record high tariff exceeding Rs.1,000 crore per year.
According to official information, the winning tariff quoted by Sterlite Power was Rs.13148.08 million (or roughly Rs.1,315 crore) per year. This is perhaps the highest tariff seen in any ISTS scheme awarded under the tariff-based competitive bidding (TBCB) modality, in recent history at least.
It may be mentioned that Power Grid Corporation of India Ltd (PGCIL) and Adani Energy Solutions Ltd (AESL) were also in the final race. While it could not be ascertained which of these two bidders was placed L2 at the end of the e-reverse auction (e-RA), the L2 bid was Rs.13181.04 million, just 0.25 per cent higher than the L1 bid. Similarly, the L3 bid was 0.75 per higher than the winning L1 bid.
The transmission tariff, broadly speaking, is the annual transmission charge that the winning bidder (or transmission service provider) earns for use of the transmission scheme by designated users ((long term transmission customers or LLTC), as envisaged in the transmission service agreement or TSA. In normal case, this charge is fixed for the entire duration of the concession period, usually set at 35 years.
It is mandatory that Central Electricity Regulatory Commission (CERC) adopts and approves the tariff, and grant transmission licence to the transmission service provider (TSP) before the TSP could begin commercial operations.
High project cost
The basic reason for such high tariff is the envisaged project cost. When the Khavda IV-C scheme was approved by the National Committee on Transmission (NCT) in its 14th meeting held on June 9, 2023, the scheme was estimated to cost Rs.5,340 crore. However, according to a senior government official, who did not wish to be named, the Khavda IV-C is now estimated to cost over Rs.12,000 crore. Such variations in estimated costs can be result of several factors — primarily, modification in project scope.
Project details
The Khavda IV-C project, officially described as “Transmission system for evacuation of power from potential renewable energy zone in Khavda area of Gujarat under Phase-IV (7 GW): Part C,” includes several components straddling Maharashtra and Gujarat, the main ones being:
- A 258km, 765kV double-circuit transmission corridor connecting South Olpad (GIS) substation to Boisar-II GIS substation
- New 6,000 MVA, 765/400/220kV GIS substation at Boisar-II
- Two LILO lines, covering approximately 162 km and terminating at Boisar-II
- A 21 km, 400kV transmission corridor connecting from Boisar-II (GIS) substation to Velgaon GIS substation
- STATCOM systems at Boisar-II and Navsari substations
The scheme has an envisaged completion period of 24 months.
Higher tariffs expected ahead
Prior to Khavda IV-C, the highest transmission tariff, at Rs.5089.66 million, was observed in the case of “Khavda IV A Power Transmission Ltd,” according to information available with T&D India. This scheme was recently awarded to Adani Energy Solutions Ltd.
Going forward, transmission charges, even higher than those seen in Khavda IV-C, can be expected from schemes like Rajasthan Part I Power Transmission Ltd, Khavda V-A Power Transmission Ltd and KPS III HVDC Transmission Ltd. The Rajasthan Part I project, as already reported by T&D India on August 19, 2024, has come in for re-tendering, even after PGCIL emerged L1. By current thinking, Khavda V-A Power Transmission could set a new record for transmission tariff as the project outlay, as estimated by NCT, is close to Rs.25,000 crore.
Also read: Record substation capacity addition likely in FY25
Featured photograph (source: Sterlite Power) is for representation only
