The National Committee on Transmission (NCT), in a recent meeting, has recommended the tariff-based competitive bidding (TBCB) route for a major transmission project in Gujarat.
The transmission scheme, officially known as “Western Region System Strengthening Scheme – 21 (Part A and Part B)” is expected to cost a little over Rs.2,700 crore.
This development is viewed as a favourable augury for private sector participation in the power transmission sector, and comes as a refreshing departure from the recent episodes where NCT ruled in favour of the regulated tariff mechanism (RTM) for a large number of transmission projects.
The rationale for setting up the WRSS-21 (A & B) project is to relieve the overloading observed in the Gujarat intrastate system (the local grid) due to renewable energy injections at the Bhuj Pooling Station (PS). It may be recalled that in August 2018, the first wind power project, part of the country’s first interstate transmission system (ISTS) auction, was commissioned at Bhuj. Nodal agency Solar Energy Corporation of India (SECI) had conducted India’s first-ever wind auction in February 2017. This was a 1,000-mw bid where wind energy generated from one state could be transmitted to green energy-deficient states through the ISTS.
The WRSS-21 (A & B) transmission scheme consists of several components at 400kV and 765kV voltage levels. The main transmission lines involved are the 765kV double-circuit line from Bhuj Pooling Station to Lakadia Pooling Station, spanning 100 km; and the even longer 350-km 765kV double-circuit line from Lakadia to Vadodara. The two transmission lines alone are expected to cost slightly over Rs.2,000 crore.
The Central Electricity Authority has stated that wind power generation projects at the Bhuj PS, which have been successful in SECI bids of Tranche-I (300 mw), Tranche-II (550 mw), Tranche-III (1850 mw) and Tranche-IV (400 mw) are scheduled to commission by October 2018, May 2019, November 2019 and February 2020, respectively. As per the current progress, projects under Tranche-I are likely to commission from February 2019 onwards. Further, as CEA has observed, additional applications for 925 mw have been received for long term access (LTA) progressively for the period from November 2019 to March 2020. This gives an understanding of the imminent overloading in the Gujarat state grid on account of wind energy injections at the Bhuj PS.
Members of NCT noted that in view of these timelines, the WRSS-21 project would need to be implemented by February or March 2020. This means that only 14-15 months, including time for the bidding process, would be available for the scheme. It is estimated that the bidding process under TBCB takes 185 days (around six months); Power Grid Corporation of India (PGCIL) also takes 5-6 months for the bidding process, even under the RTM route. Hence, assuming a bid processing time of six months, the time available for actual implementation would be just around 8-9 months.
Bid processing agencies have been requested to complete the bidding process in a rather compressed time schedule of 140 days.
This implementation time would be insufficient considering that Adani Power was given a timeframe of 18 months for a project that involved a 400kV pooling station and a 765kV double-circuit line of around 100 km. The project in question is the transmission system associated with the ultra mega solar park at Fategarh in Rajasthan’s Jaisalmer district.
Keeping in mind the fact that WRSS-21 could not be implemented in 8-9 months through either the TBCB or the RTM route, NCT agreed that a minimum implementation time of 18 months would be provided, in addition to a bid processing time of 140 days. Thus NCT agreed on an implementation schedule of December 2020 for the WRSS-21 (A&B) scheme.
The most significant decision made by NCT was to implement the WRSS-21 (Part A and B) project under the TBCB regime. Bid processing agencies were requested to complete the bidding process in a rather compressed time schedule of 140 days. The two projects will be bid out separately, but concurrently, so as to achieve a synchronized completion schedule of December 2020.
The regulated tariff mechanism (RTM) involves handing over a transmission project to Power Grid Corporation of India under a nomination route of sorts. The tariff is “regulated”, which is to say it is ascertained upfront, unlike the TBCB mode where the tariff is discovered through a competitive bidding process. Tariffs associated with a transmission scheme under the RTM route would invariably be higher than those under the TBCB modality. It is for this reason experts feel that increasing occurrence of RTM could ultimately result in higher electricity tariffs for the ultimate consumer.