INDIA BUSINESS WORLD SEPTEMBER (16^th - 30^th) 2007
The Month that was ...

RELIANCE ENERGY'S RS 3,500-CR TRANSMISSION LINES GET NOD

THE government has finally cleared the two transmission line projects of Reliance Energy (REL).

The Rs 3,500-crore projects, including western region system strengthening (WRSS) II and Parbati-Koldam hydro projects in Himachal Pradesh, had been delayed due to issues raised by the public-private partnership appraisal committee (PPAC).

REL has agreed to abide by PPAC's suggestions and the agreement is likely to be signed in a week, said power ministry sources.

"It was the finance ministry which asked some clarification on the public-private partnership in the transmission projects. Later, the file had been referred to PPAC for its consideration. The issues regarding buyout and transfer of the projects are resolved as REL accepted the suggestions of PPAC. As per the agreement, REL will run the project without any buyout option. It means, the company should bear the losses if there is any instability. The projects will come under build-own-operate (BOO) scheme," said a source.

The transmission line projects of Parbati and Koldam, a 1,600 mw project each of National Hydroelectric Power Corp (NHPC) and National Thermal Power Corp (NTPC), had been delayed for almost two years now.

WRSS II, a 4,000 mw power evacuation project, has been delayed for 10 months.

Power Grid Corp of India (PGCIL), the nodal agency for both WRSS and Parbati-Koldam, had selected private partner for the projects through international competitive bidding.

For Parbati-Koldam, PGCIL had invited bids in November 2004 and final letter of selection was issued in December 2005. REL and PGCIL had floated a 74:26 joint venture for the Rs 1,500 crore projects.

As of now, the only public-private joint venture in transmission by Indian companies is the Tala hydroelectric project in Bhutan, which is between PGCIL and Tata Power.

Reliance Energy Transmission, a subsidiary of REL, had bagged the Rs 2,000 crore WRSS II project in the first international competitive bids on electricity tariff basis in the country. The bidding process was completed by the end of 2006. The project is scheduled to be commissioned by March 2010.

The scheme II project is part of the Rs 5,200 crore WRSS project, that ran into dispute last year after RETL had approached Central Electricity Regulatory Commission (CERC) for a licence to set up the lines on its own.