Govt makes India’s new Central Transmission Utility official, relieves PGCIL of CTU role

• The Centre has also relieved Power Grid Corporation of India Ltd (PGCIL) of its role as Central Transmission Utility and has declared it a 'transmission licensee' under the act

• The bifurcation of Power Grid's business has been a long-standing demand from the power sector since 2015

New Delhi: The government has declared the Central Transmission Utility of India Limited, a public sector undertaking (PSU), as the Central Transmission Utility (CTU) of India under Section 38 of the Electricity Act, 2003. At the same time, the Centre has also relieved Power Grid Corporation of India Ltd (PGCIL) of its role as CTU and has declared it a 'transmission licensee' under the act. In a gazetted notification published on March 9, the Ministry of Power said, "In exercise of the powers conferred by sub-section(1) of section 38 of the Electricity Act, 2003 (36 of 2003) (hereinafter referred to as 'the said Act'), the Central Government hereby notifies the Central Transmission Utility of India Limited, a Government Company, having its registered office at plot No. 2, sector 29, Gurgaon, Haryana, India, 122001, as the 'Central Transmission Utility', within the meaning of sub-section(10) of section 2 of the said Act, to undertake and discharge all functions of Central Transmission Utility…"

"Further, in exercise of the power conferred by the second proviso to sub-section (1) of section 38 of the said Act, Power Grid Corporation of India Limited, which was declared as 'Central Transmission Utility', vide Gazette Notification Dated the 27th November, 2003, shall continue to be a deemed Transmission Licensee under the Act and discharge functions incidental and connected therewith and would also undertake functions as directed by the Central Government or Authority in that regard," the notification added. This notification will be effective from April 1, 2021, said the Ministry of Power.

PGCIL carved out Central Transmission Utility in 2020

In June 2020, PGCIL announced that it has been directed by the Ministry of Power to set up a subsidiary with separate accounting and Board structure, which would be responsible for carrying out statutory functions, as identified for Central Transmission Utility (CTU) under the Electricity Act, 2003, and also other functions assigned to the CTU by CERC. The company was incorporated in December 2020.

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The bifurcation of Power Grid's business has been a long-standing demand from the power sector since 2015. Critics have pointed out the conflict of interest involved when PowerGrid, which is also an electricity transmission construction company, takes part in competitive bidding process alongside private players. As CTU, PowerGrid is responsible for the transmission of electricity generated by producers and for planning transmission systems and operations. It also collects tariffs from power producers and state electricity boards in the form of ISTS (Inter-State Transmission System) charges for using the transmission infrastructure. The conflict of interest arises because PowerGrid acts as both a planner and as a participant in bids for transmission projects. 

Private power sector players had also alleged that PGCIL was 'purposefully' mismanaging transmission planning so that the lines get delayed and are given to state-run firms on nomination basis. On its part, PGCIL had claimed that transmission planning process is collaborative and transparent and there is a well-established procedure of planning of transmission system. 

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