Three months ago, he had trumpeted this as a landmark legislation which would ensure electricity to power-starved consumers. However, analysts now say several supportive measures need to be taken of the act fulfills the role it was intended for.

The Electricity Laws (Amendment) Act 1998, commonly referred to as the Transmission Act has undeniably paved the way for local and foreign companies to enter the transmission business. However, it needs to be supplemented by policy documents on procedure, defining options and opportunities. "While the minister's intentions are honourable, the guidelines on eligibility, returns, payment, risk factors and guarantees have to be defined," said Nitin Anandkar, analyst in Jardine Flaming.

"A detailed power transmission agreement must be worked out on the line ofpower purchase agreement (PPA) and fuel supply agreement," said Kaushal Kapadia of Arthur Andersan. Clarifications on issues such as tariff structure, incentives, depreciation, penalty and mode of payment are also needed by companies to evaluate the proposal.

"We are waiting for the centre and state governments to announce guidelines for setting up a transmission company," said a senior official of Asthom, a global major in power.

Given the huge investment in capital-intensive power transmission systems which cannot be provided by the government alone, the sector has been opened to the private sector. "With the planned increase in power generation, there was an urgent need to privatise the transmission sector as state electricity boards and Power Grid Corporation could not meet the investment needed to evacuate and transport electricity," said Kapadia. The investment ratio in power generation and transmission is around 1:1.

"It is a positive development and for a geographically widespread country,transmission linkage is important. Power plants must be set up near the source to save on transportation cost. Without an efficient electricity evacuation and transmission system, the benefit of enhanced generation capacity cannot be realised," said Anandkar. As the transmission system is linked with electricity generation, transmission utilities will have to wait until a power project reaches the implementation stage," added Kapadia.Like the Electricity Regulatory Commission Act, the Transmission Act also provides for setting up of independent agencies such as Central Transmission Utility (CTU) and State Transmission Utility (STU) to regulate the transmission system in their respective areas. However, it does not specify any time limit for setting up these utilities, he said.

The act empowers the CTU and STU, with similar functions in their respective jurisdictions, to okay power transmission projects as per the directives given by the centre or state regulatory commissions. The licence will, however, begranted by the Centre and state commissions and until these commissions are set up, they may provide it subject to the provision of sub-section (4) of the Electricity Act.

Here, the transmission licensee will be authorised to construct, maintain and operate any inter-state transmission in the centre and intra-state transmission system for states.

"While it is clear that new projects can be awarded to private companies, it is not clear if the maintenance and operation or ownership can be offered to private private parties," said a senior official in a state electricity board. If privatisation of existing infrastructure is possible then a procedure has to be defined, he added.

Besides, in some cases, it would be viable to join a new transmission network with the states' facility but norms for such projects have to be drawn. It is also not clear if the grid management too should be done by the transmission company. As per the act, the CTU shall undertake transmission of energy through inter-statetransmission system and will plan and coordinate transmission system with state STUs, central and state governments, power generating companies, regional electricity boards and authorities, licenses, including transmission licensees and any other person notified by the central government.

The STU shall undertake transmission of energy through intra-state transmission system and shall plan and coordinate related issues with the CTU, state government, power companies and other state-level agencies. In other countries, the concept of power trading companies is popular and has brought in efficiency and cost-competency in the market, said Anandkar.Past experience in power privatisation has led to investors becoming less pro-active and not lured by mere verbal promises. Speed of policy implementation has to be accelerated to regain their confidence, he added.The act has amended Section 30 of the Electricity Act allowing the licensee to transmit or use energy at 250 watts. It also introduced a fine of Rs 3,000 anda daily fine of Rs 300 on by negligent transmission companies.However, vital issues like fixing a minimum load on the transmission line, controlling the flow and responsibility for different circumstances of load fluctuation need to be addressed, said industry experts.

Projects will be more attractive if the load on the transmission line is assured. This means that those commissioned by independent power producers (IPPs), where the plant load factor is guaranteed, will be preferred. Even in these cases liabilities of the power/transmission companies and electricity boards must be defined.

The act has allowed companies to enter transmission without being a generation or distribution company. Till now the sector was managed by the centre and state agencies or some licensee utilities engaged in distribution or generation. While a distribution company could enter transmission, a license solely for transmission was not allowed.

The act has widened the scope of competence which will also strengthen thesystem. India needs to save every bit of electricity produced and competency will bring down the transmission losses, Anandkar said. Linking of payment and incentives of a transmission company with the supply of power will also help, he added. These companies should also be considered a part of the infrastructure sector and get incentives offered to power generation and other projects, said Kapadia.

The move has generated hopes for the core sector-related electronics and electrical industry which has suffered a setback in recent past. However, the industry will have to wait to reap benefits until some of the projects are announced, said senior officials for Asea Brown Boveri (ABB). Even if the tenders are issued now, the effect can be seen only during the next financial year, sources add.