Assignment no 2

9/28/2011

Transmission line case study Part 1

Group 5 Members: Ankush || Arun || Krishna || Murali || Nikhil

The various major steps that need to be taken before the actual tendering process can be initiated are: Feasibility study of the project Planning the optimum location for the layout of the transmission lines Seeking approval from civic authorities and government Securing funds for the project Inviting tenders through notifications

Feasibility study of the project

The feasibility of the project has to be studied before it is embarked upon. The details of various costs incurred by the company in terms of installation of infrastructure, development of lines and distribution costs need to be identified. Alongside this, the expected number of consumers over a period of time and the revenue stream generated from them also need to be discerned. The prime objective of such a project should be to try and have a greater reach at lower cost to maximize the value of the revenue stream. A cost benefit analysis would help reach a suitable conclusion regarding the project

Planning the optimum location for the layout of the transmission lines
Having determined that the project is feasible, the optimum path to lay the transmission lines needs to be identified. To determine the layout, there are several constraints that need to be taken into consideration. Some of them being, the cost of land acquisition, the effect of installation of the lines on the environment around, the displacement of population around and so on. To this effect, a basic engineering design needs to be developed.

Seeking approval from civic authorities and government

Once the design is in place, the permissions for installation of transmission equipment need to be obtained. The authorities that primarily need to clear the project would include the Ministry of Environment and Forestry, the local authorities, the Ministry of Power, the state regulatory commission among others.

Securing funds for the project

To secure the funds, various fund providers need to be brought in perspective. Commercial banks, power financing companies, state/central government would be among those who would be the first to be approached for funding. To satiate the requirements of these companies, a credit rating report needs to be submitted along with a financial plan detailing the future cash flows.

Inviting tenders through notifications

Contingency plans need to be developed to take care of most of the emergencies that may arise. With the funds and other plans in place, tenders need to be invited from contractors for the implementation of the project. For this, tenders are called for in major dailies across the country. Once the bids are submitted, the project is suitably awarded to the contractors whose offer is deemed to be the most appropriate.

STAKEHOLDERS ANALYSIS
1. Generating Company: Will dictate the technical details regarding capacity required, etc. 2. Transmission Company: The company that is setting up transmission line will be at the helm of affairs. 3. Discom: Will help in evaluating the feasibility of project through metrics like end cost to consumer 4. End Consumers: Will finally bear the cost of the entire project by paying higher tariffs. 5. Central Government: Has stake in development of far-flung areas and will have to manage conflict between other politically motivated opponents. 6. State government: Stake in the development of the local area for effects like employment, land acquisition 7. Financing Company: Will provide monetary support based on economic viability and scope of social development of the project 8. Auditing Authority: Will audit the workings of the estimates presented at various levels for further clearance and so is clearly and important stakeholder 9. Bidding contractors: With every bidder wanting to win, the losers are bound to try to make the project execution more difficult. 10. MoEF: Since the transmission line passes through forest land, the ministry has to look at the ecological impact of the project and so can stall the project on grounds of clearance. 11. People affected by land acquisition 12. Municipality: Some part of transmission lines might pass through municipal areas, requiring attention of the municipal authority 13. Supreme Court: Permission for using land under reserved area comes directly from the Supreme Court.

State Govt. Genco Transco Central Govt. Discom High Supreme Court MoEF Auditing Authority Ruling political party Financing Company Power Regulatory commission End Consumer Bidding Contractors Industy consumers Municipality People of country People affected by land acquisition People of the state Low Employees and Families of Transco Low Interest High

The project can face resistance from/at the following processes of the project: 1. Feasibility at various stages: Technical, financial feasibility, consideration of ecological and social impact. At all such stages the adequate procedures would have to be identified and consequently appropriate solution would have to be worked out with the stakeholders. 2. Land acquisition: The Transco needs to give appropriate notice and follow all legal regulation while acquiring land. It should take proper steps to ensure fair compensation and work towards social and economic development of the affected people. 3. Tendering Process: To prevent any future litigation on the fairness of the tendering project, the transmission company should establish a transparent process and clear guidelines. 4. Political will to execute the project with clashes between Central and State Government.

Comparison between our analysis and the one given by Transco company employees
1) Economic and Financial feasibility report has been covered in both analysis. They have additionally mentioned points regarding cost of capital, hurdle rates and interest which are not explicitly mentioned in our report but are implicitly touched upon.

2) The approval process has been explained in details in both the analysis. Their report talks about special approval from railway authorities and Aviation authorities which have not been considered by us. Also they have given a detailed description of forest approvals and typical delegation of power for grant of permission. Also details regarding width of the corridor is discussed by them. 3) Funding of the project has been mentioned in both the analysis and more or less similar points are considered. 4) Stakeholder analysis has been done by us on a Power-Interest matrix. The stakeholders more or less match with the analysis given and also with respect to the degree of influence, interest and power of the respective stakeholders.