Cabinet approves hike in Powergrid's equity investment threshold to Rs 7,500 crore per subsidiary

Union minister Ashwini Vaishnaw

New Delhi, Feb 24 The Union Cabinet on Tuesday approved a proposal to increase the equity investment threshold of public sector enterprise Powergrid from Rs 5,000 crore to Rs 7,500 crore per subsidiary to enable it to bid for capital-intensive transmission projects.

The decision was taken by the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, at its first meeting at the Prime Minister's new office, Seva Teerth.

"The CCEA has approved enhanced delegation to Powergrid under the guidelines dated February 4, 2010, of the Department of Public Enterprises (DPE) on delegation of powers applicable to 'Maharatna' CPSEs.

"The approval enhances the permissible equity investment limit of Powergrid from the current threshold of Rs 5,000 crore per subsidiary to Rs 7,500 crore per subsidiary, while retaining the existing cap of 15 per cent of the company's net worth," Information and Broadcasting Minister Ashwini Vaishnaw told reporters after the meeting.

The approval will enable Powergrid, the largest and most experienced transmission service provider in the country, to expand its investment in its core business and support the evacuation of renewable energy capacity, helping achieve the target of 500 GW from non-fossil-based sources.

The Central Public Sector Enterprise (CPSE) can now participate in the bids for capital-intensive transmission projects, such as Ultra High Voltage Alternating Current (UHVAC) and High Voltage Direct Current (HVDC) transmission networks.

Additionally, it will broaden competition in Tariff-Based Competitive Bidding (TBCB) for selection of bidders for critical transmission projects, thus ensuring better price discovery, which will ultimately lead to the availability of affordable and clean energy for consumers, said an official release.