China poses security threat in power sector: trade body

Several Chinese firms are gearing up to participate in bids invited by Central and State sector utilities for transmission

March 12, 2017 09:51 pm | Updated 11:07 pm IST - MUMBAI

Getty Images/zhengzaishuru

Getty Images/zhengzaishuru

A bid by Chinese, state-owned companies to enter India’s power transmission sector has raised national security concerns in Indian power gear circles. Local power gear makers’ lobby group, the Indian Electrical Equipment Manufacturers Association (IEEMA), has raised a red flag over the issue.

IEEMA has cautioned against the associated risks if Chinese firms are allowed to bid and operate transmission projects in India.

Huge contracts

After entering the consumer goods and power generation equipment market in India, Chinese firms are now eyeing the nascent transmission sector where multi-billion dollar contracts are up for grabs.

China Southern Power Grid International (HK Company Ltd.), a subsidiary of state-owned China Southern Power Grid Co Ltd., has partnered with CLP India Private Ltd. to build power transmission networks in India. Several Chinese firms are gearing up to participate in bids invited by Central sector and State sector utilities for establishment, operation and maintenance of transmission lines for periods ranging from 25 to 35 years.

In bids called for the inter-state transmission system projects involving investments worth more than ₹3,000 crore, China Southern Power has submitted qualification documents to build, own and operate power transmission networks in India.

The consortium has submitted qualification documents for three projects for which bids were invited.

The projects are: transmission systems for an ultra-mega solar park in Jaisalmer, Rajasthan, Eastern Region Strengthening Scheme (ERSS)-XXI and the New WR-NR Inter-Regional Corridor.

The long-term nature of the contracts ensures that the successful bidder will have ownership over the projects during the entire duration, people familiar with the development said.

According to IEEMA, electricity transmission is a critical infrastructure for the economy and has significant bearing on the national security. The outage of one transmission element can have a cascading impact and can lead to a grid blackout situation, putting the military establishment, internal law and security and hospitals at a great risk,

It said that from the points of view of data security and control on data communication, these are critical assets. “It is very important to safeguard the transmission system operation from grid stability, grid security as well as data security perspective,” IEEMA said in letters written to various government departments.

“As a nation, we are not [on] good terms with China. . We must take extreme caution as it involves the crucial power sector,” said Sunil Misra, Director General, IEEMA.

“Power is a critical infrastructure. It is difficult to imagine what will happen if the grid collapses [due to] some ulterior motive. We need to have safeguards,” Mr. Misra added. “Any nation or company where the relationship is suspect, we should not be dealing with them.”

“We have no problem if contracts are given to French or German companies, [as these] which will not pose any security threat.”

But not to Chinese companies. Like India will not buy fighter jets from China, it should not hand over its critical power infrastructure to them," he said.

IEEMA had earlier written to India’s National Security Adviser (NSA) Ajit Doval, seeking a ban on Chinese equipment in transmission, equating grid security to national security as hacked networks could bring down military establishments and hit railways, hospitals and operations in the oil sector.

Chinese companies and firms with Chinese links are barred from bidding for Indian ports and they are not allowed dredging contracts due to the sour political relations between the two countries.

Industry experts say that India should be careful while allowing foreign companies, particularly Chinese firms to participate in the transmission business.

“If it is only transmission line, which is mainly conductor and tower, there is no problem. I am only concerned about the sub-station where the controlling function takes place. But, since the line and sub-station are being bid out together, there could be a threat. They (Chinese firms) controlling sub-stations in trunk routes could be an issue,” said R.N. Nayak, former chairman, Power Grid Corporation of India Ltd.

Former Union Power secretary R.V. Shahi said, “The government needs to be selective in choosing the agencies for the transmission sector which is critical to power supply. I am not opposed to Chinese companies but we need to be selective and cautious. For critical assets like this we should depend on selected agencies which have been doing it for us for decades.”

“Security of the grid and uninterrupted operation is critical for power supply. The power transmission sector just can not be open up for any player. That is the concern.” Mr. Shahi said.

In 2016, citing national security concerns, the Australian government rejected competing bids from Hong Kong and mainland Chinese groups for control of a company that supplies electricity to Sydney and neighbouring areas. The bid was for a 50.4% controlling stake in Australian electricity distributor Ausgrid.

Further, in November 2016, a U.S. Commission, which provides non-binding recommendations to Congress, has accused Beijing of using its huge state-owned enterprises (SOEs) as tools to advance national security goals.

Warning of a threat to national security, the U.S.-China Economic and Security Review Commission wanted the United States to block Chinese state-owned companies from carrying out takeovers in the country.

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