In a landmark decision, the Central government has decided to hive off the Central Transmission Utility (CTU) function of the state owned Navratna-company Power Grid Corporation of India Limited (PGCIL). Pending since 2015, this move was taken to avoid conflict of interest while awarding power transmission projects.
Power Grid, as a CTU, is responsible for the wheeling of power generatedby power producers and involved in planning transmission systems and operations. It also has an additional role of collecting tariffs from power generators, state electricity boards using the transmission infrastructure. The CTU retains its share and then distributes the remainder to other private licensees.
As PGCIL is also a power transmission construction company, it participates in tenders for competitive bidding for projects, alongside private players. This conflict of interest in PGCIL as both planner and participant in transmission projects has come under repeated criticism from the industry.
In a letter to the chairman and managing director of PGCIL, the Ministry of Power has directed it to make the CTU its 100 per cent subsidiary with separate accounting and board structure and carry out its statutory functions.
“The aforesaid 100 per cent subsidiary company would be separated into a new CTU Limited, a wholly owned government of India company within six months or till completion of formalities for creation of new CTU Ltd,” said the letter by power ministry, which was reviewwed by Business Standard.
It further said the creation of revenue stream of the new CTU will be formalised by Central Electricity Regulatory Commission (CERC) and till then Power Grid will manage the revenue of CTU.
This follows hiving off the grid management function from Power Grid and creation of a separate company called Power Systems Operation Corporation (POSOCO) Ltd in 2014.
On Monday, union petroleum minister Dharmendra Pradhan said the government is planning to unbundle state-owned GAIL into two companies for gas transmission and marketing business.
PGCIL owns and operates close to 95 per cent of the Indian power transmission network.