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Transmission project: REL seeks govt help

July 11, 2006 13:47 IST

Unable to kickstart its maiden transmission project even two years after winning the bid, Reliance Energy Ltd has now sought government intervention to ensure that state-run Power Grid Corporation of India Ltd signs the formal joint venture agreement at the earliest.

The Anil Ambani group firm has written to power ministry seeking directions to PGCIL to ink the shareholders agreement on the Rs 750-crore (Rs 7.5 billion) project that would evacuate power from NTPC's 800 MW Koldam and NHPC's 800 MW Parbati hydroelectric projects in Himachal Pradesh, official sources told PTI.

Power ministry, in turn, has asked for a reply from the central transmission utility since any delay in completing the Koldam-Parbati transmission system would effect evacuation of power from the two projects that are scheduled to begin generation for the northern grid by mid-2008, sources said.

"There are one-two small issues left for finalisation. We are in touch with Reliance Energy and the agreement would be cleared within two weeks," senior Power Grid officials said.

Power Grid had in July 2004, through an international competitive bidding, selected REL as the joint venture partner for executing the 400 kv transmission lines. The public sector company had obtained Cabinet clearance in September 2005 for the project, in which REL will have 74 per cent equity. 

The two companies had initialled a joint venture pact in January 2005, but REL contends that PGCIL changed the bid condition later in June last year making the private company responsible for revenue collection. The two firms then again initialled an amended pact in October 2005. The final deal was to be signed in January this year, but was postponed.

REL says Power Grid has in the past sought various extensions to sign the final agreement and fears that the transmission projects may face cost and time-overruns. 

The Koldam-Parbati project was to be only the second such instance of public-private partnership in the transmission sector. The first is the Tala transmission project -- a joint venture between Tata Power and Power Grid -- to evacuate electricity from the Tala hydel project in Bhutan, which is expected to be commissioned shortly.

Incidentally, this is not the first time that REL and Power Grid have had differences over a project. Last year, Central Electricity Regulatory Commission had rejected an application by REL for a licence to set up transmission lines in western region states after Power Grid raised objections on the grounds that it was already working on these lines.

PGCIL is also in the process of setting up more joint ventures with Essar Power, Torrent, Jindal and IL&FS to evacuate electricity from their generation projects.

No private company has so far executed any transmission project on its own. Power Grid is also in the process of selecting a company that would build the country's first fully independent private transmission lines in Maharashtra and Gujarat at an estimated investment of Rs 1,500 crore (Rs 15 billion).

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