A big step towards promoting private sector participation in Transmission Sector

New Delhi, Ministry of Power has released the revised Standard Bid Documents (SBDs), containing Request for Proposal (RfP) and Transmission Service Agreement (TSA) for award of Inter-State Transmission System (ISTS) Projects on Tariff Based Competitive Bidding (TBCB).

The Ministry of Power is committed towards Public Private Partnership (PPP) in different spheres of power sector. Transmission is the most vital link in the power sector value chain connecting Generation and Distribution. Revision of SBDs for award of ISTS project on TBCB would enhance PPP in transmission sector and would attract more private investment in Transmission Sector.

In line with National Tariff Policy 2016 notified by the Central Government, ISTS system is developed through TBCB, except for certain category of ISTS system, which are strategic, technical-upgradation or time-bound in nature.

Last SBDs were issued in 2008. A strong need was felt to revise the SBDs considering the latest model of infrastructure development, best practices available in other infrastructure sectors and demand of stakeholders and further facilitate and encourage private sector investment. Based on extensive stakeholders’ consultation, revised SBDs for award of ISTS system on TBCB have been prepared.

Some of the salient provisions of the Revised SBDs are

(a) The Transmission Service Agreement (TSA) with the selected bidder will now be signed by CTU, instead of the Long Term Transmission Customers (LTTCs). In the past, bidding process for ISTS projects could not be completed in time due to non-signing of TSA by LTTCs and this provision would help in timely completion of bidding process.

(b) In line with best practices available in other infrastructure sector, provision of Independent Engineer during construction phase has been included in the SBDs for monitoring, quality assurance and quantification of cost/time related issues. These would help in reducing number of disputes as well as appropriate risk sharing.

(c) Completion of many transmission lines are found delayed due to not so precise line route survey handed over to the bidders during bidding process. As a result, many a times, bidders used to do their own survey before submitting their bids. Provision has been made for preparation of transmission line route survey in advance, to ensure better accuracy of transmission line route survey. As a result, the need for having transmission line route survey carried by each bidder would be obviated and as well as bidders would be aware of all issues involved in construction of the lines before the bidding.

(d) In the earlier SBDs, it was stipulated that the entire bidding process needs to be completed within 145 days from date of initiation of bidding process. The time of completion of bidding process has been reduced to 91 days in the revised SBDs. Further, it has been stipulated that entire bidding process shall be completed online in a transparent manner.

(e) In order to enhance competition, EPC contractors having adequate experience of developing infrastructure projects have been allowed to participate in the bidding subject to meeting net worth requirement and other criteria as per SBDs.

(f) Provisions relating to change in law, termination and consequential payments have been changed to bring more clarity and to reduce risk perception to the bidders.

(g) In order to bring more clarity to developer on status of TBCB assets after expiry of contract period of 35 years, the mode of execution of ISTS project has been changed from Build-Own-Operate-Maintain (BOOM) to Build-Own-Operate-Transfer (BOOT).

(h) To promote ease of doing business, bidders will now be required to quote one transmission tariff for the actual TSA period.

It is envisaged that the Revised SBD would promote ease of doing business for private developers in transmission sector, address concerns of developers on risk sharing, encourage competition in transmission, and facilitate timely completion of transmission lines. All these provisions would bring in more private investment in transmission sector.