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Private power transmission companies move CCI, regulator against power grid pricing

Private power transmission companies move CCI, regulator against power grid pricing

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Companies have alleged that the central utility has unfair competitive advantages given its access to low-cost funds and government support.

NEW DELHI: Private power transmission companies have written to the Competition Commission of India, Comptroller and Auditor General and power regulator Central Electricity Regulatory Commission, alleging predatory pricing by Power Grid Corp (PGCIL) in the midst of auctions of some Rs 9,000-crore projects.

Companies have alleged that the central utility has unfair competitive advantages given its access to low-cost funds and government support. Private companies want PGCIL to be barred from crosssubsidising competitive tariff projects with the help of low-cost, AAA-rated debt raised through its cost-plus assets, and separation of central transmission utility role.

A senior government official said the Centre will look into it. Letters were sent by the Independent Power Producers Association of India (IPPAI) late on Thursday.

PGCIL has emerged as lowest bidder in most transmission projects so far auctioned on competitive tariff basis, bagging about 40% such contracts. Sterlite Power, Adani Transmission, Essel Infra and L&T Power are among other prominent private players in the fray. IPPAI has sought intervention of agencies and the power ministry in the competitive bidding currently underway for nine transmission lines in renewable projects of Gujarat and Rajasthan.

“There are some grave concerns on the abnormally and unreasonably low pricing being done by PGCIL in certain competitive bids for awarding transmission projects, taking unfair advantage of its massive financing and pricing power owing to its large base of assets built under the cost-plus mechanism,” the association said.

Private firms alleged that PGCIL has an asset base of over Rs 2 lakh crore of cost-plus projects allocated through government support. According to IPPAI, the 15.5% return earned by Power Grid Corp on cost-plus projects compensates for low returns from lines won under tariff-based competitive bidding.

“This has created a non-level playing field, which is not contemplated in the Electricity Act 2003,” it said. The Independent Power Producers Association also alleged that PGCIL’s positioning as the central transmission utility and on the national and empowered committees on transmission gives it access to advance information about new projects and an edge over others in configuring them at the conception stage itself.

“If this goes unabated, it will slowly and steadily kill the private transmission industry and lead to monopolistic trends that hurt consumer interest by misusing public funds to kill competition,” it said.

Source: economictimes.indiatimes
Anand Gupta Editor - EQ Int'l Media Network

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