Recently, Bihar Grid Company Ltd (BGCL) was in the news when lending agency Power Finance Corporation sanctioned financial assistance worth Rs.1,350 crore, representing the entire debt component of a Rs.1,688-crore transmission upgrade scheme. The project aims at constructing 16 transmission lines, four associated substations and seven line-bay extension works in the eastern state.
BGCL is a significant development for Bihar, as it represents the only joint venture that Central transmission utility Power Grid Corporation of India (PGCIL) has formed with any state government. BGCL is an equal joint venture between PGCIL and Bihar State Power (Holding) Company Ltd, meant to develop the intra-state transmission system in the eastern state.
Bihar has had a rather unsuccessful experience when it comes to engaging private sector enterprise in its wanton power value chain—right from generation to transmission to distribution.
Bihar should also be thankful that the JV with PGCIL clicked. It may be mentioned that PGCIL had planned a similar joint venture with Odisha but matters did not proceed beyond the initial discussion stage.
Several years ago, the state government tried to build power generation plants using the tariff-based competitive bidding route but it not find takers. Ironically, even a 4,000-mw ultra mega power project (UMPP), which comes under the Central government’s ambit, was put on hold because the anticipated tariffs would be higher than what Bihar currently pays to buy power from the exchanges. Even after coal blocks were identified, the 4,000-mw UMPP was put on hold, according to information tabled in Parliament in March last year during the tenure of former power minister Piyush Goyal.
Power distribution
Even when it comes to power distribution, the state has a poor record. The state’s plan to find a power distribution franchisee for capital city Patna did not find takers, even after at least four attempts. The state, some three years ago, was finally able to find franchisees for the circles of Gaya, Muzaffarpur and Bhagalpur. However, two contracts—those of Muzaffarpur and Bhagalpur—were terminated and the contract for the Gaya circle is reportedly not shaping up well. Trouble began between the state government and the private franchisees over rural electrification works under the DDUGJY scheme. Bihar Chief Minister Nitish Kumar Yadav even mentioned last year that no positive outcome has arisen from the distribution franchisee activity in Bihar.
Also read: Taking the stress off power generation
Given that Bihar needs much to be done in its power distribution sector, the state must pursue the option of appointing a distribution licensee as a joint venture between the state government and a private entity. Such a model has been successfully deployed in Delhi between Tatas (Tata Power Delhi Distribution Ltd) and Reliance Power (BSES Yamuna and BSES Rajdhani.)
Bihar is lucky enough to have had the involvement of PGCIL, through Bihar Grid Company Ltd. It can now look forward to significant improvement in its power transmission network; the state could also see 765kV lines in its grid. A similar private partner in the power distribution sector, could be the next best thing to happen for Bihar.
Bihar should also be thankful that the JV with PGCIL clicked. It may be mentioned that PGCIL had planned a similar joint venture with Odisha but matters did not proceed beyond the initial discussion stage.