Transmission and distribution firms expect higher orders from new govts

Hope of Madhya Pradesh, Rajasthan and Chhattisgarh prioritising power supply

With change in governments in Madhya Pradesh, Rajasthan and Chhattisgarh, power transmission and distribution (T&D) companies are hoping to see more opportunities in these states. 

Some attribute it to the expectation that power supply is a priority while others see focus moving from roads to electricity.

“We expect more order activity in the three states where there are new governments,” said Vimal Kejriwal, chief executive officer (CEO) and managing director for KEC International. 

He added, “The earlier government’s focus was on other sectors like building roads in some of these states. But now, we expect the focus back on the transmission and distribution sector.”

The Congress formed governments in the three states in December, following its victory in the assembly elections. KEC International, Adani Transmission, Sterlite Power and Kalpataru Power are some of the major private players eyeing this segment in these states.

Ved Mani Tiwari, CEO of global infra business at Sterlite Power, points out that the Centre chalked out its transmission plan to evacuate power from Rajasthan and Madhya Pradesh, but the state governments will need to do their part, he added. These states would also require to identify requisite state-grid augmentation schemes to connect their major load centres with the Inter-State Transmission System (ISTS) network to benefit from this low-cost generation,” Tiwari added.

Email queries sent to Adani Transmission and Kalpataru Power went unanswered.

The evacuation plan at the central government level involves an investment of Rs 18,000 crore for evacuating 20 giga watt (GW) in Rajasthan and 5 GW in Madhya Pradesh.
 

“It is not that there was not enough work happening in the previous government, but the trend is likely to continue. In addition, my guess is these companies are hopeful that more contracts will be awarded with the new governments starting work,” said a power consultant, who did not wish to be identified. 

“In states like Madhya Pradesh, to have a strong leader like Kamal Nath may also be adding to the confidence. The previous government in Madhya Pradesh also did a good job.”

Companies like Sterlite Power is of the opinion that states like Rajasthan and Chhattisgarh will need more of tariff-based competitive bidding (TBCB) similar to Madhya Pradesh’s plans. Madhya Pradesh is already utilising TBCB to select the developer for transmission projects worth Rs 900 crore, industry officials point out.

According to a India Ratings report dated January 2, transmission lines capacity picked up in November, after a decline in the addition rate in the first half of the financial year. 

“In November 2018, transmission line addition picked up with 1,435 circuit kilometers. During, the first half of FY19, transmission line addition declined 4.2 per cent year on year. The central and state sectors led the transmission line addition in November 2018,” the report said.