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L&T, Kalpataru and KEC all bidding for Rural Electrification Corporation and PFC transmission projects

Engineering, procurement and construction (EPC) companies like L&T, Kalpataru Power and KEC International plan to participate in eight transmission projects of Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) as developers for a 35-year concession. Tenders for the projects are expected next month.

The decision to run the projects on a ‘build, own, operate, maintain and transfer’ basis, however, depends on assurances from the authorities that the linked power plants should simultaneously ready along with the transmission lines, and that payments for wheeling electricity should be guaranteed.

REC’s four transmission projects and one project on southern region system strengthening are valued at Rs 4,800 crore. It is expected that four of PFC’s projects are of similar size. PFC Consulting officials, who are mandated along REC to do the bid coordination of the eight power transmission projects, were not available for comment.

K Venkatesh, infrastructure development project head of L&T, said they were willing to participate as before. “Transmission being an intermediary between generators and consumers, we have to ensure that both parties are ready when we complete the projects. There should be secured payments over the 35-year concession.”

Ramesh Chandak, MD and CEO of KEC International, said they were looking for a partner with whom to bid. He declined further comments on who the partner could be.

Manish Mohnot, executive director of Kalpataru Power, too said they would bid but gave no further comments.

REC and PFC are floating international tenders for the projects. Investments in transmission, particularly in intrastate wheeling of power and distribution, have been short of targets.

S K Gupta, CEO of REC Transmission Projects Company (REC-TPCL), said, “It is an opportunity for EPC providers to now think big and graduate to the next level and become developers. It is also a way of promoting competition that will eventually help optimise the cost of electricity consumed by masses.”

But for this to happen, industry experts believe, the authorities should address several issues of concern to the developers.

“The right of way and forest clearances take lots of time. There are no returns on investments, while the interest cost goes up. It is also not clear if state electricity boards will buy the power produced. All this should be sorted before we can see investments transmission match those in power generation,” said Chandak of KEC International.

REC-TPCL has been mandated by the power ministry to select developers for five projects.

They are: transmission connectivity to NCC Power Projects, 20 additional transmission systems for the Unchahar power station in Uttar Pradesh, evacuation of power from NTPCs 3×800 mw Kudgi project in Karnataka, evacuation of power from NHPC’s Berasul hydel project in Himachal Pradesh and a southern region system to enhance power import from the east.

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