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The road to an independent grid manager has been cleared with the government deciding to take over Power System Operation Corporation Ltd (Posoco), a wholly-owned subsidiary of Power Grid Corporation. An inter-ministerial group in a meeting last week approved buying out Power Grid equity in the company. A senior government official the matter would now be put up to the Cabinet for approval. "The government will be buying the equity at book value of around INR 35 crore and it will be a non-profit company," he said.

Power transmission utilities will be required to charge a small levy on every unit of power which would go towards meeting the working expenses of Posoco. The company, that has five Regional Load Despatch Centres (RLDCs) and the National Load Despatch Centre (NLDC), was set up in2010 as a subsidiary of Power Grid on the recommendations of a committee under GB Pradhan, former Additional Secretary and now the chairman of Central Electricity Regulatory Commission.

The panel had suggested independent and sustainable revenue streams for the grid operator through separation of commercial interests from load management functions. Experts say liberalised power markets require the system operator to be independent entities so as to ensure impartial system operation.

"In India PGCIL has been playing the role of Central Transmission Utility (CTU), owner of transmission assets and the system operator. Since now we have significant number of private transmission utilities and going forward even more is expected - it isimportant that POSOCO is made an independent entity," said Debasish Misra, senior director, Deloitte.

He added typically system operators are Government owned entities or owned by all sector players to avoid any influence over them. Apart from the central transmission utility, Powergrid, two large private companies - Reliance Power Transmission and Vedanta Group's Sterlite Technologies - are executing independent transmission projects awarded by Power Finance Corporation (PFC) and Rural Electrification Corp (REC). The idea behind hiving off Posoco, with its load dispatch function, from Power Grid was mooted in the aftermath of the national grid collapse of July 2012.

By granting full autonomy to Posoco, the government hopes to insulate the grid operator from pressures from other players in the transmission sector that is fast opening to private participation. It would be required to ensure grid discipline, discourage overdrawal of power by states and impose a fine on defaulters. For this, it would be governed by the guidelines set out by CERC.

Source-On Request