Comments
Between 2023 and 2032, India would need to spend ₹9.16 lakh crore on building fresh transmission lines, according to the Central Electricity Authority (CEA). The enormity of the bill implies that the government cannot do this on its own; the private sector would need to be roped in. Today, the private sector operates in a few pockets but expanding its footprint in the power transmission business has been a challenge.
In December 2024, the CEA organised a meeting to deliberate on the ‘monetisation of transmission assets’. It recently released an ‘outcome document’, which details the discussions.
‘Monetisation’ is essentially a fixed period of asset transfer, addressing fears over privatisation of transmission systems.
The document says there are two models for monetisation — InVITs (investment trusts) and AOMT (acquire, operate, maintain, transfer). The former seems to be preferred. The public sector power transmission major PGCIL, which has so far monetised five transmission assets through InVITs, said at the meeting that even though the InVIT model is “somewhat intricate”, it operates under a “robust regulatory framework overseen by SEBI” and hence gives confidence to investors.
It was also recognised that monetisation of transmission assets is not easy. In the case of assets with regulator-fixed tariff, there is uncertainty over tariff changes every five years, the tax implications of transferred assets and manpower redeployment.
To encourage entry of the private sector, participants at the meeting called for certainty in the bid process, preparedness in consultations with regulators, treatment of pre-existing litigation related to transferred assets, treatment of existing human resources and associated costs connected to the transferred assets, and payment security.
The Ministry of Power suggested that the chosen assets should be litigation-free. A transparent bidding process can build trust. “For states lacking investor confidence regarding payment security, PSUs can manage the bidding and enter into back-to-back agreements with State governments and service providers,” the Ministry suggested.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.