DSIJ Mindshare

Power Transmission Projects Persprective in FY16

Government is going to invite bids of Rs 1 lakh crore for power transmission projects in current financial year. The decision of government is to bring private sector investment in the industry. Government is  focused on providing 24x7 power for all in next five years. This ultra plan is the need of the hour for power transmission and distribution projects. The planning and execution of the projects will be for a longer horizon. The power generation capacity has doubled, whereas the power transmission capacity has increased by 1.5 times.

In the month of July, transmission projects about Rs 4000 crore will bid out by PGCIL along with competition of private companies like L&T, Essel, SGL, Adani Power, KPTL, Tata and Tata Realty.

The PSU companies have a major market share of 95 per cent compared to private sector companies in the power transmission and distribution industry. Though the sector is witnessing large capacity deficit, 90 per cent of power transmission business is carried by Power Grid Corporation of India (PGCIL). The sector has been opened for private sector companies in the year 2010 to keep pace with power generation.

PGCIL has an ability to avail cheaper funds because of balance sheet and due to economies of scale are able to garner better deals on equipment as compared to private rival companies. This scenario is helping the company to bid 30 per cent less than competitor bidders. However, power generation sector has 40 per cent market share of private companies.

There were around 3 billion units of electricity that remained unsold due to lack of transmission corridors between north and south in the country as of FY15. The main cause for electricity deficit is that there is no existence of infrastructure to drive from one point to another in an efficient way.

 PGCIL having a monopoly over the sector is dominating norms for technology selection and hiring contractors. The company has order book of more than Rs 1.3 lakh crore. The projects awarded to the company are running on an average of 12 to 14 months delay. The delay in the projects is due to land acquisition issues and delay in power generation installation. The industry is suffering from a major bottleneck of projects.

The government is keen to roll out Deendayal Upadhyaya Gram Jyoti Yojana and Integrated Power Development Scheme. The other way round framework will be set for 1 lakh MW solar power and 38000 MW wind energy. Coal is on track to achieve one billion tonnes production.

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