Government of India Plans to Establish New Central Transmission Utility

November 22, 2016


The government of India is said to be considering the establishment of a dedicated Central Transmission Utility (CTU). Replying to whether the government is contemplating the creation of a separate organization for assigning the responsibility of planning inter-state electricity transmission network; Minister of Power, Mr. Piyush Goyal, stated, “Government has contemplated the creation of a separate entity as a dedicated company having operational and financial autonomy which will discharge the statutory functions of the CTU along with other functions which among other things includes Power System Planning.”

Explaining the details of creating such an entity he commented, “the proposal for creation of such an entity is presently at a preliminary stage.”

An official at the Ministry of Power told Mercom, “transmission is one of the factors due to which renewable energy sector and the power sector as a whole is suffering, it is also one of the main reasons why developers and projects are facing losses; the government has been trying to bring about reform, to achieve this a new and transparent entity is required.”

Power projects in India face huge losses due to transmission problems. It amounts to losses and projects being shut-down. Once the new CTU is formed, it will have regulatory powers. It will also become easy for the government to monitor and regulate. The developers will not have to worry about evacuation of power. It will also lead to government programs like rural electrification being successful, as transmission network and a dedicated CTU will lead to all areas coming under the grid, further commented the official.

The official also stated that with Wind sector becoming competitive and large hydro being considered renewable; the transmission network cannot be caught napping. The creation of a new and separate entity is necessary to complement the growth in renewable energy sector. A separate entity is required to carry out fast-paced grid strengthening and upgradation of transmission network in the country.

As previously reported, the Power Grid Corporation of India (PGCIL) is seeking loan assistance of $1 billion (~Rs.67.82 billion) from the Asian Development Bank (ADB) to set up green energy transmission corridor.

“As we get into 2017, transmission issues can put the brakes on the current momentum in renewable energy addition. This agency could be a good move if it can handle transmission issues quickly and effectively. If approved, this would be the second new government agency created after Solar Energy Corporation of India (SECI) to handle the renewable energy push in India,” commented Raj Prabhu, CEO of Mercom Capital Group.

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