Centre eases equity lock-in clause for transmission projects

New Delhi, Nov 7 (SocialNews.XYZ) In a bid to get more private sector participation in the transmission sector, the Centre has eased regulations and allowed investors to exit projects by selling their entire holding in the secondary market after one year of commercially operationalising the project.

The Union Ministry of Power has issued amendments in the standard bidding documents for selection of transmission service providers for inter state transmission network under which an investors equity holding in special purpose vehicle (SPV) will be locked in only for a period of one year from the commercial operation date of the project won by them. The lock in period was two years earlier.

As per the amendments, the selected bidder's aggregate equity shareholding in the SPV should not be less than 51 per cent up to one year after the project's commercial operation date (COD).

Earlier, the selected bidder's aggregate equity share in the SPV was to be at least 51 per cent up to two years after the commissioning date and 26 per cent for three years after that.

The earlier regulations meant that an investor in transmission projects had to wait for two to five years to monetise its project and start exploring for other investment options.

Power ministry has also eased consortium regulations for transmission projects allowing any member (other than the lead member) of such entities to divest its equity anytime if the remaining members hold the minimum equity.

Under the existing provision, any member was allowed to divest equity if the remaining members' (including the lead member) aggregate share was not less than 26 per cent for three years after the first two years, during which the members were required to hold 51 per cent equity share in the SPV.

Source: IANS