Interstate transmission: Centre allows surety bond and payment of order instruments as bid security
To bolster payment security for interstate power transmission projects, the government has introduced Payment of Order Instruments (POI) and Insurance Surety Bonds (ISB) as alternative security instruments. These measures, applicable to projects developed through tariff-based competitive bidding, aim to facilitate the evacuation of renewable energy, including 9 GW from Rajasthan and Karnataka, with significant capital expenditure allocated for transmission infrastructure.
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The centre has reworked norms governing award of power transmission projects spanning across states by adding additional options for payment security. The Payment of Order Instruments (POI) would be invoked in the event a transmission service provider defaults. This, and an Insurance Surety Bond (ISB) have been introduced as alternative security instruments within standard bidding documents for Inter-State Transmission Service (ISTS).An office order said these measures will be applicable for transmission projects being developed through tariff based competitive bidding. The definition of bid bond has been tweaked to include Insurance Surety Bond and Payment of Order as Bank Guarantee in the standard bidding documents.Players seeking to develop these projects can obtain a POI only from either Indian Renewable Energy Development Agency (IREDA), Power Finance Corporation (PFC), or REC . A similar regime was introduced for awarding Renewable Energy (RE) projects in the country from September 2020 onwards.Development of transmission networks are planned to keep pace with RE capacity addition in the country.In June 2024, the centre approved new ISTS schemes to evacuate 9 GW of renewable energy (RE) from Rajasthan and Karnataka. The power evacuation scheme of Rajasthan Renewable Energy Zone (REZ) will evacuate 4.5 GW of RE power from the state at a capital expenditure of about Rs 12,241 crore. The System strengthening scheme of Karnataka will evacuate 4.5 GW RE power from Koppal area and Gadag area at a capex of about Rs 1,354 crore.
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