The ministry of power has prepared a draft policy for private investment in the transmission segment of the power sector hoping to encourage private players. However, the draft policy seems to be sending out mixed signals.

On one hand, it calls for private investments but limits the transmission projects in which they can participate. Sources in the regulatory commission say that the draft policy runs counter to the provisions of the Electricity Act 2003.

The Act allows any person to approach the regulatory commissions for a transmission license. However, the draft policy guidelines seem to demarcate certain projects for the private sector. The draft policy suggests the creation of an empowered committee, which will identify projects to be developed under this scheme. "Identification of projects under this scheme will be done in such a way that it results in a balanced mix of both difficult and less difficult projects." Regulatory sources say that read along with draft guidelines for competitive bidding, it would seem that private players were being restricted. "Section 63 of the Act doesn't mention that all projects have to be through competitive bidding, but both the draft guidelines and the draft policy seem to suggest that the private sector can undertake only certain projects," said sources in the regulatory commission.

According to senior power ministry officials, the idea is not to restrict private players but to encourage them. "It is not as if there is a long queue of private players waiting to participate in the transmission sector. The idea of the draft policy is to encourage private players, to help them build their expertise, and to do all this without jeopardising the transmission system and its expansion," said a power ministry official.
However, the draft policy says that the central transmission utility and joint venture companies can bid for those projects identified as open for bidding by private players. This, experts say, will not promote private investment in transmission.