ew Delhi: The Ministry of Power has made it mandatory for new projects to get transmission services through tariff-based competitive bidding. In other words, the company offering the lowest transmission tariff will emerge the winner.
This move is aimed at attracting more private investment into the transmission sector, as is the case for road projects.
“The intra-State transmission projects would also be moving to the tariff-based competitive system from January 2013, according to the tariff policy,” according to a statement issued by the Ministry on Tuesday .
Till now, eight inter-State transmission projects worth Rs 14,000 crore have been allotted through competitive bidding, it added.
For implementing the tariff-based regime, against the earlier cost-plus system, the Ministry has put in place a Standard Bidding Document that has been used by some intra-State transmission projects.
A viability gap funding (VGF) model has also been evolved. In this model, the Centre would invest 20 per cent of the capital while a further 20 per cent would be invested by the State Government. The remaining will have to be met by the successful bidder.
“There are some transmission sectors that do not generate much revenue. And, therefore, private companies do not participate. By implementing VGF, more investments can be made through the private-public partnership route,” said a Power Ministry official.
The Ministry has asked all States and Union Territories to use either the VGF model or the Standard Bidding Document for procurement of intra-State transmission services.
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