Equity Threshold Raised to ₹7,500 Crore Per Subsidiary
New Delhi, February 24: The Union Cabinet on Tuesday approved a proposal to raise the equity investment threshold for Power Grid Corporation of India Limited from ₹5,000 crore to ₹7,500 crore per subsidiary. The move is aimed at enabling the state-owned transmission major to participate in capital-intensive power transmission projects.The decision was cleared by the Cabinet Committee on Economic Affairs at its first meeting held at the Prime Minister’s new office, Seva Teerth, under the chairmanship of Narendra Modi.
Enhanced Delegation Under Maharatna Guidelines
Briefing reporters after the meeting, Information and Broadcasting Minister Ashwini Vaishnaw said the CCEA approved enhanced delegation to Powergrid under the Department of Public Enterprises guidelines dated February 4, 2010. These guidelines govern delegation of powers applicable to Maharatna Central Public Sector Enterprises.With this approval, the permissible equity investment limit per subsidiary increases to ₹7,500 crore, while the existing overall cap of 15 per cent of the company’s net worth remains unchanged.
Push for Renewable Energy Evacuation and Grid Expansion
The higher investment ceiling will allow Powergrid, the country’s largest transmission service provider, to scale up investments in its core transmission business. The move is expected to strengthen infrastructure required for evacuating renewable energy and support India’s target of achieving 500 GW of non fossil based power generation capacity.The revised limit will also enable the Central Public Sector Enterprise to bid for large scale transmission projects, including Ultra High Voltage Alternating Current and High Voltage Direct Current transmission networks, which require substantial capital deployment.
Greater Competition in Transmission Project Bidding
According to the official release, the decision will broaden competition under the Tariff Based Competitive Bidding framework for the selection of developers for critical transmission projects.Enhanced participation by Powergrid in capital intensive bids is expected to improve price discovery and promote the availability of affordable and clean electricity for consumers, while strengthening the national power transmission network.
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