India's Powergrid plans power transmission investment bonanza

By Sunil Saraf

July 7, 2010 - The Power Grid Corporation of India (Powergrid) is expected to begin tendering nine major Indian power transmission projects following approval from the regulatory authority. The projects are estimated to cost more than Rupee 580 billion ($12.3 billion) in total.

Collectively known as the High Capacity Power Transmission Corridors program, the various lines will transport electricity to the main load centers from new independent power producer (IPPs) plants. (See related table: High Capacity Power Transmission Corridors program).

The regulatory approval follows the issue of new regulations by the Central Electricity Regulatory Commission (CERC) after an 18-month-long consultation process on the "sharing of inter-state transmission charges and losses." Powergrid builds and operates inter-state transmission lines.

The construction of a large amount of new generation – and thus transmission – capacity is necessary to mitigate existing Indian power shortages, let alone meet the strong projected growth in electricity demand.

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The current shortfall is estimated by the Central Electricity Authority at 10.1% in energy terms and 12.7% in peak demand terms, according to CERC. (See related table: Asian power projects Q1 2010).

CERC noted that, based on the apparent progress in implementing IPP projects, it was satisfied that the "High Capacity Transmission Corridors are required for evacuation of the power from these IPPs and any delay in implementation of these transmission schemes may result in bottling up of the power."

IPP developers had submitted affidavits backed by on-the-spot assessments regarding the progress of their projects, CERC said.

"Moreover, the project developers or IPPs have signed and submitted bank guarantee in many cases," the regulator added.

The IPP projects are located in the coal belt, coastal areas capable of importing coal, or hydroelectric-rich areas in the northeast.

Power from the various projects must be delivered to load centers in the northern and western regions of the country, requiring development of the transmission systems.

The regulator will later prescribe power transmission charges to allow Powergrid to recover its costs.

"It shall be the responsibility of [Powergrid] to ensure completion of these projects at optimum cost using best contractual practices including international competitive bidding," CERC said, directing the company to submit quarterly progress reports on the transmission schemes and associated generation projects.

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