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Reverse bidding for power transmission projects likely

what is reverse bidding

Shreya Jai | New Delhi Jul 01, 2015 12:31 AM IST

To invite private sector investment in the power transmission sector, the government is likely to adopt reverse bidding for awarding projects.

The new bid document, officials said, would set a benchmark price below which the companies would need to bid. The move comes in wake of the government's intention of awarding transmission projects worth Rs 1 lakh crore during the year. Power Finance Corporation (PFC) is in the process to award around eight new transmission lines.


Senior executives in PFC said the new lines would be bid according to the new bidding document which would be enforced soon. "The new bid document which is under draft stage would suggest a certain benchmark price of a transmission project. The participants would have to bid lower than that price. The industry has become mature in the past five years of it being opened to the private companies. Hence, aggressive yet sensible bids would be expected," said an official in the know.

This also follows the recent directive of hiving off the 'Central Transmission Utility' function from the Power Grid Corporation of India Limited (PGCIL). PGCIL as CTU

is responsible for wheeling of power generated by power producers and involved in planning transmission systems and operations. It also has additional role of collecting tariffs from power generators, state electricity boards etc using the transmission infrastructure. The CTU retains its share and then distributes the remaining to other private licensees.

But PGCIL as a transmission company also participates in tender based competitive bidding for transmission projects along side private players. This conflict of interest has faced repeated criticism from the industry.

A FICCI report in 2013 on power transmission said as it is also CTU, "Power Grid can make sensitive information available to it without much difficulty. it is tariff collection agency - this confers additional powers to the company to potentially arm-twist private players."

To prevent any such conflict here on and also provide level playing field to the private companies the new bid document is underway, said senior officials. PFC which along with Rural Electrification Corporation (REC) manages most of the bidding and now would review the bidding process for the projects in the 'request for proposal (RFP)' stage.

Six out of eight lines being bid out by PFC are in the RFP stage.

Category: Forex

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