Cabinet Approves Increase in Powergrid's Equity Investment Threshold to Rs 7,500 Crore per Subsidiary

Powergrid Receives Enhanced Investment Threshold from Union Cabinet

On February 24, the Union Cabinet approved a proposal to increase the equity investment threshold of Powergrid, a public sector enterprise, from Rs 5,000 crore to Rs 7,500 crore per subsidiary. This decision was made by the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, to enable Powergrid to bid for capital-intensive transmission projects.

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% of the company's net worth.

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.

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