Private sector participation in transmission project will increase now investors will be able to exit the project after one year | Private sector participation in transmission project will increase, now investors will be able to exit the project after one year

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  • Private Sector Participation In Transmission Project Will Increase Now Investors Will Be Able To Exit The Project After One Year

new Delhi32 minutes ago

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According to earlier rules, the investor had to wait for at least 2 to 5 years to exit the project completely.

  • Central government reduced the equity lock-in period from 2 years to 1 year for transmission projects
  • The shareholding of the selected bidder in SPV should not be less than 51% from 1 year to the date of commercial operation

In order to increase private sector participation in the transmission sector, the central government has relaxed some rules. The government has allowed investors to exit the project by selling their entire stake in the secondary market, 1 year after the project’s commercial operation started. The Union Ministry of Power has reformed the standard bidding document for the selection of transmission service providers for the inter-state transmission network.

Under this reform, an investor’s shareholding in the Special Purpose Vehicle (SPV) will remain locked for only one year after the commercial operation of the winning project starts. The first lock-in period was two years. Under the amendment, the total shareholding of the selected bidder in the SPV should not be less than 51% from the commercial operation date (COD) of the projects to 1 year.

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Earlier there was a rule to keep at least 51% for 2 years and at least 26% for 3 years.

From the first commissioning date to two years, there was a rule to keep the elected bidder’s share in SPV at least 51%. Similarly, for 3 years this stake was to be held at least 26%. According to earlier rules, the investor had to wait for at least 2 to 5 years to exit the project completely.

Ministry of Power also relaxed consortium rules for transmission projects

The Ministry of Power also relaxed the consortium rules for transmission projects. Now any member other than the consortium’s lead member can sell his stake at any time, provided the remaining members hold the minimum shares. Under the earlier rule, any member of the consortium could sell its stake at any time, provided all other members, including the lead member, hold at least 51% stake in the project for the first two years and at least 26% stake in the third year.

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