Ministry Of Power’s Draft Guidelines To Boost PSP Development And Power Transmission Through PSU Involvement

The government has introduced draft guidelines aimed at promoting the development of Pump Storage Plants (PSPs) and establishing a transparent, fair, and standardized procurement framework. These guidelines focus on the procurement of storage capacity or stored energy from PSPs through open competitive bidding, with a balanced approach to risk-sharing among stakeholders.

In a notable policy shift, the government has proposed allowing public sector undertakings (PSUs) to participate in competitive bidding for power transmission projects under the Tariff-Based Competitive Bidding (TBCB) process. This move is intended to enhance competition and efficiency in the power transmission sector, which is crucial for meeting India’s growing energy demands. Under the proposed guidelines, central public sector enterprises (CPSEs), state public sector undertakings (SPSUs), and joint ventures involving these entities would be permitted to bid for transmission projects. This is a departure from previous practices, where competitive bidding for transmission projects was largely dominated by private sector players.

The guidelines emphasize the importance of maintaining a level playing field, requiring PSUs to adhere to the same terms and conditions as private sector participants in the bidding process. The government has also outlined specific conditions to ensure that public sector involvement does not lead to conflicts of interest, thereby preserving the integrity of the competitive bidding framework. This policy shift is part of the government’s broader strategy to strengthen the transmission sector, which is vital for integrating renewable energy into the national grid. India’s ambitious renewable energy targets have made it essential to develop a robust and reliable transmission infrastructure. By including PSUs in the TBCB process, the government aims to accelerate the development of this infrastructure by leveraging the expertise and resources of public sector entities.

The draft guidelines are currently open for stakeholder consultation, with the Ministry of Power inviting feedback and comments from industry stakeholders. The inputs received during this consultation process will be considered before finalizing the guidelines. The proposed inclusion of PSUs in the TBCB process is seen as a strategic move to address the growing complexity and scale of transmission projects in India. As the power sector continues to evolve, there is an increasing demand for large-scale and sophisticated transmission solutions. Public sector entities, with their technical expertise and resources, are expected to play a key role in meeting these challenges.

The government’s decision to involve PSUs in the competitive bidding process is also aimed at promoting greater competition in the transmission sector, which is expected to lead to more efficient and cost-effective project execution. This policy shift is likely to have a significant impact on the future development of India’s power transmission infrastructure, particularly in the context of the country’s renewable energy goals. The draft guidelines represent an important step toward integrating the strengths of public sector enterprises with the competitive dynamics of the private sector, ensuring a more resilient and efficient power transmission network across the country.