After Prime Minister Manmohan Singh announced last month that power transmission should be “truly opened up to competition”, the Power Ministry is putting in place measures that would split the dual—regulatory-cum-operations—functions of the central transmission utility Powergrid Corporation of India Ltd (PGCIL).Under the plans, the Government would carve out a new company from PGCIL that would undertake regulatory functions of load despatch and management. Sources said initially the new company would be a subsidiary of the Powergrid, but at a later stage would be made totally independent. They said a Cabinet note to this effect was being finalised and would soon be circulated for approval.No decision was taken so far on the issue of separating the regulatory functions of Powergrid because there were two views on the matter. While one view was that both these functions should be vested with one entity—like in Europe—the other was to adopt the US model where the regulatory function is carried out by an independent system operator.However, last month, at a chief ministers’ meet on power, the Prime Minister had said “inter-state transmission needs to be truly opened up to competition and a separate and independent Government entity to control the national load despatch centre should be considered”.With this clear direction, the Power Ministry has decided to bring all regional load despatch centres and the national load despatch centre under one separate company.Load despatch is one of the critical functions in power system operations with despatch centres responsible for constantly calibrating the demand and supply of power. At present, this function is being performed by Powergrid, which is also responsible for building and operating inter-state transmission lines.Sources said as private investments were needed in the transmission sector, it would give more comfort to private players—who would also compete for projects with Powergrid—if these functions were separated.While agreeing on the divided opinion on the matter, sources said India was a large country and should not be compared with Europe. They also said the intention was not to immediately strip Powergrid of these functions. Rather, they said, the process should be done over a period of time. First by creating a separate entity out of Powergrid but at the same time keeping it as a subsidiary and then when it has gained enough experience making it an independent body.
