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Advertorial | August 2014

Grievance redressal mechanisms need overhaul

Pratik Agarwal, Head-Infrastructure Business, Sterlite Technologies, speaks on the main factors influencing the growth of the transmission & distribution sector in the country.

Union Budget and its effect on the power transmission sector
The announcement around the Infrastructure Investment Trust-Infrastructure REITs is very critical and will ensure fresh equity and capital infusion in the infrastructure sector. This should help the power transmission sector and also the entire infrastructure sector.

Technology adoption in transmission & distribution
We have been at the forefront of introducing latest technologies in building transmission lines in the country. e.g. helicopter survey, helicopter stringing - which is 5 times faster and avoids ROW issues. However, we feel that developers are not invcentivised for early commissioning of projects, or for maintaining global safety standards and due to this global technologies are not being adopted at the rate they should. If project documents provide incentive via provisions for early tariff in case lines are commissioned before time or makes it mandatory for all bidders to use such technologies, we feel that technology adoption will be much better.

Grievance redressal mechanisms
The redressal method needs a substantial overhaul. Due to changes in law and force majeure conditions, several projects are stranded in the country. We need to realise that a single stranded transmission project has impact on several thousands MWs of power generation, resulting in thousands of crores of losses. Our existing redressal mechanism is extremely slow and time-consuming due to which many projects in the power sector remain stranded and cause a lot of damage to the system. A fresh method needs to be created by which the competent regulator can give quick "in-principle" decisions in matter of days, and the final order can come later.

We have recently received investment of Rs 500 crore by Standard Chartered Private Equity in our transmission business. There is a very strong pipeline of projects being announced. Recently, MoP has announced Rs 12,500 crore worth power projects for this year. If the momentum of projects on tariff based competitive bidding is continued and minor changes in regulatory framework are affected, the transmission sector has potential to attract huge investments.

The reason for the gap in generation growth
The policymakers are trying to bridge the gap. The key reason lay in the differential amount of privatisation in both sub-sectors. Most of the growth in generation capacities in the last 5 years has been contributed by the private sector. Whereas most of the projects in transmission are only executed by a few public sector entities. While tariff-based competitive bidding has been successful in the last 2-3 years, the Ministry of Power and the grid-planners need to ensure that all the projects are awarded on tariff based competitive bidding where private players can participate. This will surely help in bridging the gap.


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