Power Grid to Separate its Central Transmission Utility Function

In a landmark decision, the Ministry of Power has advised state-owned Power Grid Corporation of India Ltd (PGCIL) to separate its Central Transmission Utility (CTU) role.

The move has been taken by the government in order to avoid the conflict of interests as since long back industry stakeholders were objected when in cases PGCIL called for bids and then also took part as a participant as well.

Now, as per the recent Power Ministry directives, the company will have to set up a separate 100 per cent subsidiary having separate accounting and Board structure.

Thus, the newly formed company will be responsible for carrying out statutory functions as identified for Central Transmission Utility (CTU) under the Electricity Act, 2003, and also other functions assigned to it by the Central Electricity Regulatory Commission (CERC).

The Power Ministry directed PGCIL that “the aforementioned 100 per cent subsidiary company (CTU) would be separated as a wholly-owned Government of India company within 6 months or till the completion of formalities for creation of the aforementioned company.”

Earlier in 2014 also, the grid management role of the company was hived off from it and created a separate company i.e. Power Systems Operation Corporation (POSOCO).

Buoyed by the development, shares of the company were closed at Rs 171.35 apiece, up 3.60 per cent, from the previous close on the exchange.

In May this year, PGCIL floated tenders for Statcom Package-I & II for the evacuation of 8.1 GW of power from solar energy zones in Rajasthan. The PGCIL described in a tender document for package-I as “Statcom Package-I for Statcom at 400kV Fatehgarh-II PS associated with transmission system strengthening scheme for the evacuation of power from solar energy zones in Rajasthan (8.1 GW) under phase-II-part B1.”

Whereas for package-II, it stated “Statcom Package-II for Statcom at 400kV Bhadla-II PS associated with transmission system strengthening scheme for the evacuation of power from solar energy zones in Rajasthan (8.1 GW) under phase-II-Part B1.”