Guidelines for Encouraging Competition in Development of Transmission Projects

Aug 11, 2021 | by TeamLease RegTech Legal Research Team

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Industry Specific Compliance

The Ministry of Power on August 10, 2021 has issued guidelines on Encouraging Competition in Development of Transmission Projects In order to promote the competition.

The Electricity Act, 2003 envisages competition in transmission and has provisions for grant of transmission licenses by the Central Electricity Regulatory Commission (CERC) as well as State Electricity Regulatory Commissions (SERCs).

The National Electricity Policy notified on 12th February, 2005 inter-alia states that–

• The Transmission System requires adequate and timely investments and also efficient and coordinated action to develop a robust and integrated power system for the country. 

• Keeping in view the massive increase planned in generation and also for development of power market, there is need for adequately augmenting transmission capacity.

• Special mechanisms would be created to encourage private investment in transmission sector so that sufficient investments are made for achieving the objective of demand to be fully met by 2012.

Considering the magnitude of the expansion of the sector required, a sizeable part of the investments will also need to be brought in from the private sector. The Act creates a conducive environment for investments in all segments of the industry, both for public sector and private sector, by removing barrier to entry in different segments. Section 63 of the Act provides for participation of suppliers on competitive basis in different segments which will further encourage private sector investment.”

The Tariff Policy notified on 28th January, 2016 inter-alia states that –

The tariff of all new generation and transmission projects of company owned or controlled by the Central Government shall continue to be determined on the basis of competitive bidding as per the Tariff Policy notified on 6thJanuary, 2006 unless otherwise specified by the Central Government on case to case basis. 

Further, intra-state transmission projects shall be developed by State Government through competitive bidding process for projects costing above a threshold limit which shall be decided by the SERCs.”

In order to facilitate the smooth and rapid development of transmission capacity in the country as envisaged in the National Electricity Policy, inter State /intra State transmission projects, other than those exempted by the Central Government, shall be implemented through tariff based competitive bidding.

The “Guidelines for Encouraging Competition in Development of Transmission Projects” issued on

13th April, 2006 as amended from time to time, are hereby repealed.

Provided, however, that any agreement signed or action taken prior to the date hereof shall not be affected by such repeal of the said Guidelines of 2006 and shall continue to be governed by the Guidelines repealed hereunder.

[Notification No. 15/1/2017-Trans]



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