Very recently, state transco Maharashtra State Electricity Transmission Company Ltd (MSETCL) formally acquired two intrastate schemes in its home state, under the tariff-based competitive bidding (TBCB) mechanism.
This development is significant on several counts. It also inspires one to revisit the regulatory framework of the TBCB philosophy.
By winning intrastate-TBCB schemes, MSETCL becomes the first state-owned transco to debut in the TBCB space. It sets a potential precedent for other progressive state transcos to follow. In this context, the Rajasthan state transco, RVPN, has also announced its plans to bid for intrastate schemes under the TBCB modality.
While subscribing to the TBCB route for building intrastate grids is a progressive step, by itself, the phenomenon of state transcos participating in the bidding process and winning TBCB projects, defines a new paradigm altogether.
In this paradigm shift, it is time to revisit the TBCB framework. Firstly, planning of intrastate schemes is done by a special unit, called the State Transmission Utility (STU), which is housed with the state transco. This STU must be hived off into a separate entity. If this is not done, state transcos will be allegedly privy to sensitive information about the project that could give them an unfair advantage over other private sector aspirants during the bidding process.
The Centre has proposed to do this segregation. In fact, state transcos will also be divested of their grid management operations, so that state transcos function like pure transmission service providers (TSP).
This has already been done in the case of Power Grid Corporation of India Ltd (PGCIL) that is now divested of its CTU and grid management operations, and functions like a TSP at various levels – cross-border, interregional, interstate and even intrastate.
Taking this forward, state transcos, after their restructuring as TSPs, should also get listed on stock exchanges. This will enable fund mobilization apart from creating a semblance of “public-private partnership,” in terms of its equity holders.
Secondly, if we examine the bidding pattern of one of the two intrastate-TBCB schemes that MSETCL has newly won, the winning bid was far better than the next-best quote. While MSETCL has bid for several other schemes that it did not win, instances where a state transco wins a project by a wide margin could engender unwarranted debate of the state transco having a priori information of project parameters. The dissociation of STU from the state transco is therefore strongly warranted.
Several states have lined up intrastate-TBCB schemes, and in time, many of these state transcos will themselves participate in the bidding process.
It is therefore in all fairness that restructuring of state transcos be done expeditiously so that they function as pure TSPs. Only this will make the “C” in TBCB, truly competitive in letter and spirit.
The author, Venugopal Pillai, is Editor, T&D India (www.tndindia.com) and may be reached on venugopal.pillai@tndindia.com. Views expressed here are personal.