‘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

Project Monitor - - PM INTERVIEW - A trans­mis­sion line con­structed by L&T at an over­seas lo­ca­tion.

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.

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