‘Power transmission has been L&T’s preferred area’
— S.N. Sunkari, Joint General Manager - Business Development (Power Transmission), L&T Infrastructure Development Projects Ltd
The following points supplement the rationale behind entering into transmission development space: (i) As per the 12th Five-Year Plan projections on power transmission, ample business opportunity is available in both central and state sector. L&T IDPL believes that the transmission vertical is a potential business area and no single entity can meet such a large requirement to bridge between generation and distribution system across country. (ii) Though there are implementation challenges during construction phase, once implemented the revenue model is fixed in nature and is immune from economic growth and industrialisation etc. (iii) With fast changing global economic scenarios, L&T IDPL prefers to invest in such fixed revenue models. We are targeting to achieve ` 10,000-crore power transmission business portfolio size in next five years. Please describe the scope of the Kudgi transmission project. What would be the project cost and how is it going to be financed?
The scope of the Kudgi project includes following transmission lines: 2 Nos. x 400kV double circuit (Quad Moose) line from Kudgi TPS switchyard to Narendra (New) 765kV double circuit (Hexa Zebra) line from Narendra (New) to Madhugiri 400kV double circuit (Quad Moose) line from Madhugiri to Bidadi The approximate project cost is ` 1,300-plus crore. The project, to be financed through a consortium of banks and financial institutions, has already achieved financial closure in February 2014. What is the broad current status of the project and when do you expect physical work to begin? We have obtained regulatory clearances such as Transmission License and Tariff adoption from Central Electricity Regulatory Commission in time. Approval u/s 164 is in process.
As far the physical progress is concerned, being a fast track project we have commenced foundation activity in January 2014 and tower erection is planned from May 2014 onwards. Larsen & Toubro, as a group, has successfully constructed several challeng- Apart from interregional schemes (inter-state) power transmission schemes, is L&T-IDPL equally keen on bidding for intra-state schemes, under the PPP mode? We are evaluating options and are open for both central and state sector initiated transmission business opportunities, and as a business strategy, participate in selected ones. The Union power ministry embarked on developing interregional transmission lines on PPP mode using the tariff-based competitive bidding somewhere in 2006-07. How do you rate the overall Weak financial health of developers and low economic growth Having said this, other reasons could be: Delays in obtaining regulatory clearances Lengthy procedures for obtaining statutory approvals specially forest clearance Inadequate project documentation; the RfP and TSA do not address the remedial measures on payment security, cost/time escalations under force majeure conditions to protect developer’s investment Financial health of discoms discourages developers from pursuing PPP model projects. Due to lack of clarity or uncertainties associated with fuel linkage and power sale policies many generation projects are stranded up which in turn affecting transmission developers. Given that there is ample scope for private sector enterprise in power transmission development, what would be your suggestions to accelerate private sector participation? We suggest that government authorities concerned could initiate the following measures, with a view to accelerating private sector participation: Clarity on key project documents like RfP, TSA and RSA explaining risks/mitigation mechanism should be
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read full article at www.projectsmonitor.com brought about. This will protect/comfort private developers’ investments Stringent qualifying requirements should be introduced (both technical and financial) to invite participation from serious players Accurate timelines shall be defined for granting statutory/regulatory approvals including forest clearance by the government authorities concerned, with deemed approval clause after specified timelines. There shall be level-playing mechanism among all transmission developers—both private sector/PSU developers Right of Use shall be with Government of India or if it is in developers’ scope, uniform guidelines/compensation mechanism shall be implemented across India through suitable constitutional amendments which are non-challengeable in any court of law.