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``This project was the beginning of public-private participation in power transmission which should be a trend-setter for future investments,'' Mr R.P. Singh said.

Mr R.P. Singh (left), Chairman-cum-Managing Director, Power Grid Corporation of India Ltd, with Mr Bhanu Bhushan, Director, Operations, addressing a press conference in the Capital on Monday.

NEW DELHI, June 30

USHERING in private participation in the transmissions sector, Power Grid Corporation of India Ltd (PGCIL) has entered into a joint venture with Tata Power to develop a 1,200 kilometre (km) long transmission line. The link will evacuate power from the 1200 MW Tala hydroelectric power station in Bhutan to the eastern region of the country.

While Tata Power will hold 51 per cent in the joint venture, PGCIL will hold the remaining 49 per cent, with the latter guaranteeing the former's returns from the project. PGCIL will not only obtain all the clearances to build the project, it will also be responsible towards collecting the revenues from the purchasing State electricity boards.

Addressing a press conference here on Monday, the PGCIL Chairman and Managing Director, Mr R.P. Singh, said that ``this (the project) was the beginning of public-private participation in power transmission (and) should be a trend-setter for future investments.''

The project is being set up at a cost of around Rs 1,980 crore including sub- stations, to evacuate power from the 1020 MW Tala hydro-electric power project in Bhutan to the eastern region. Project investment for the joint venture portion is estimated at Rs 1,100 crore, wherein PGCIL would invest Rs 162 crore and Tata Power Rs 168 crore towards equity participation. "The rest of the money, Rs 770 crore, would be financed by various bankers and financial institutions including IFCI, ADB and SBI, who have not sought guarantees for the funding," Mr Singh said. The project is slated to be commissioned by mid-2006.

The power from the Tala project will ultimately flow into the northern regions of the country. For this, 1,200 km, 400-kV double-circuit transmission lines would be constructed from Siliguri (West Bengal) through Purnea-Muzaffarpur, Bihar, to Gorakhpur, Bareilly and finally Mandola in Uttar Pradesh.

The power project at Bhutan is being executed through grant provided by the Government of India (60 per cent) and loans amounting to 40 per cent of the project cost.

On the investments in the transmission sector during the Tenth Plan, Mr Singh said, "We have planned to invest Rs 31,080 crore in the Tenth Plan in the power transmission sector. Of this, PGCIL's outlay stands at Rs 21,370 crore while the remaining Rs 9,710 has to come from the private sector."

On private sector projects involving 100 per cent participation in the transmission business, Mr Singh said that the main problem was the credit worthiness of the principal purchasers of bulk power, the State electricity boards. Also, obtaining `Right of Way' clearance from the State Governments for setting up transmission lines was perceived as a major obstacle.

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