Power Grid Corporation (PGC), the BSE-listed central transmission utility, plans to soon tie up with the World Bank’s International Finance Corporation (IFC), to undertake projects abroad.
The two would soon, perhaps this month, sign a memorandum of understanding for equity infusion in transmission projects, initially in Ethiopia, Kenya and other African countries, and in Central Asia on a public private participation (PPP) model. The JV would also explore participation in the coming India-Iran transmission project.
A PGC official told Business Standard: "The company and IFC are keen to jointly undertake consultancy, execution and operation of transmission projects abroad. These projects will be implemented on a build, own, operate method. The JV will be for infusion of equity. Typically, these projects are undertaken on a 70:30 debt equity ratio and both will contribute towards equity, which will help mobilise debt for these projects."
The official said a company director had recently been to Ethiopia and Kenya. "Both countries are insisting on a PPP model and the proposed JV will be in a position to implement transmission projects in these countries. IFC's presence will be a great comfort for the operation of projects abroad," he said.
Chairman R M Nayak said the company had taken up 30 international assignments, especially consultancy, in Afganistan, Bhutan, Bangla-desh, Dubai, Nepal, Sri Lanka and Nigeria.
Q3 net up 37%
The company’s net increased 37 per cent to Rs 809 crore for the third quarter of this financial year, against Rs 591 crore during the corresponding quarter last year. Total income also surged 20 per cent to Rs 2,576 crore from Rs 2,145 crore. The company, which is operating 90,000 circuit kilometre of transmission lines with 145 sub-stations, commissioned projects worth Rs 2,228 crore during October-December against Rs 1,739 crore in the same period last year.
It has so far invested Rs 47,800 crore during the 11th Plan and would spend another Rs 7,200 crore to meet its target of Rs 55,000 crore by March 31.
The investment has been made to establish inter regional power transfer capacity of 23,800 MW and by end of March another 5,000 MW of such capacity would be completed.
As far as investment in 12th plan is concerned, Nayak said the PowerGrid Corporation would invest Rs 1 lakh crore to establish inter regional power transfer capacity of additional 38,000 MW. The company has so far approved investment of Rs 70,000 crore and awarded contracts worth Rs 56,000 crore.
"Of the Rs 1 lakh crore, 30% equity will come through internal accruals and FPO proceeds while 70% debt will be raised through multilateral credit from World Bank, Asian Development Bank and suppliers' credit and also from domestic bonds and external commercial borrowings. Credit of Rs 14,000 crore has already been tied up," Nayak informed.
According to Nayak, PowerGrid Corporation has negotiated loan of $250 million from ADB without sovereign guarantee.
On the arrears from utilities, Nayak said PowerGrid Corporation would be able to liquidate its oustanding dues of Rs 460 crore by end of March this year. "The Central Electricity Regulatory Commission has been quite helpful for us as due to its support and orders the company was able to bring down its oustanding dues from Rs 3082 crore as on March 31, 2011 to Rs 460 crore as on date," he added.
Apart from these developments, PGC is to set up JVs for manufacturing major equipment. "The company has held talks with Rashtriya Ispat Nigam for establishment of a manufacturing facility for tower plants and it also discussing with Nalco (National Aluminium) for production of conductors. Similarly, JVs will be formed for manufacturing of transformers, reactors and insulators. The investment will be roughly Rs 300 crore (initially, for these plans),” said the chairman. These are proposed to get a competitive advantage to bag transmission projects.