In order to allow the public sector company Powergrid to bid on capital-intensive transmission projects, the Union Cabinet on Tuesday accepted a proposal to raise the equity investment requirement for each subsidiary from Rs 5,000 crore to Rs 7,500 crore.
Prime Minister Narendra Modi presided over the Cabinet Committee on Economic Affairs (CCEA), which made the decision during its inaugural meeting at his new office in Seva Teerth.
“In accordance with the Department of Public Enterprises’ (DPE) February 4, 2010, rules on delegation of powers applicable to ‘Maharatna’ CPSEs, the CCEA has authorized greater delegation to Powergrid.
“Information and Broadcasting Minister Ashwini Vaishnaw told reporters following the meeting that the approval raises Powergrid’s allowable equity investment limit from the current threshold of Rs 5,000 crore per subsidiary to Rs 7,500 crore per subsidiary while keeping the current cap of 15% of the company’s net worth.
In order to help reach the goal of 500 GW from non-fossil-based sources, the approval will allow Powergrid, the biggest and most seasoned transmission service provider in the nation, to increase its investment in its core business and promote the evacuation of renewable energy capacity.
Bids for capital-intensive transmission projects, namely Ultra High Voltage Alternating Current (UHVAC) and High Voltage Direct Current (HVDC) transmission networks, are currently open to the Central Public Sector Enterprise (CPSE).
According to an official release, it will also increase competition in Tariff-Based Competitive Bidding (TBCB) for the selection of bidders for important transmission projects, resulting in improved price discovery and, eventually, the availability of clean and reasonably priced energy for consumers.
