Transmission congestion has consistently reduced: I S Jha

Interview with Chairman & Managing Director, Power Grid Corporation of India

Power Grid Corporation of India beat the market estimate by a 33 per cent rise in net profit for the June quarter. I S JHA, chairman and managing director, talks to Sanjay Jog & Hamsini Karthik about what is ahead. Edited excerpts:

What will be your capital expenditure this financial year?

The target is Rs 22,550 to Rs 23,000 crore, of which Rs 7,000 was achieved till July (first four months). So, we are on track. The balance Rs 15,000 crore will be comfortably achieved. Nearly 70 per cent will be mobilised from debt.

What is the status of your investment for the 12th plan (2012-17)?

Of the Rs 1.1 lakh crore (target), investment of Rs 93,820 crore had been achieved as on July; contracts for Rs 11,433 crore were awarded in the June quarter. The total investment approved for 2016-17 is Rs 22,874 crore. The total of works in hand are worth Rs 1.44 lakh crore, of which  ongoing projects are Rs 1.13 lakh crore, new projects are Rs 15,000 crore and projects under rate-based competitive bidding are Rs 16,000 crore.

What are the investment projections for the next five years (2017-22)?

In the transmission sector, the execution period is three years. We will being investing a little over Rs 1.1 lakh crore over the next five years.

How well strengthened is India's transmission grid from the infamous collapse of 2012?

There is a continued momentum. We are adopting new technology for higher voltages. This apart, there are currently four drones deployed, apart from aerial patrolling by using helicopters, for maintenance. Between March 2012 and 2016, transmission lines and inter-regional capacity have increased manifold. In this period, the compounded annual growth rate in generation (million units) was six per cent; inter-regional transfer of power rose by a record 18.7 per cent.

The southern region has been in the news for congestion due to lack of sufficient transmission capacity. What is the present capacity there?

Transmission capacity of the new grid to the southern region is 5,900 Mw, to be augmented to 18,400 Mw by 2020. That of the western to northern region will be hiked to 20,000 Mw from the present 7,900 Mw in the same period.

During 2013-14, the total generation was 967 billion units (BU), of which 5.59 BU could not be cleared due to congestion. In FY15, of the 1,048 BU, about 3.14 BU could not be cleared. In FY16, of the total generation of 1,107 BU, about 2.16 BU could not be cleared. What is clear is consistent reduction in congestion.

Are railway clearances and rights of issue still major hurdles you face?

When we lay a transmission line, it has to cross the railway and approval takes a lot of time. Therefore, the ministry of power recently set up a committee headed by a joint secretary to suggest early sanctions by railways for transmission projects.

Right of way (RoW)  is a main issue. Why this is so is because we are paying less compensation.  According to the recent government proposal, 85 per cent of the cost of land below a tower and 15 per cent along the  transmission line will be paid to farmers. Also, compensation for crops. In urban areas, too, there is an RoW issue; projects in Bengaluru and Delhi, among others, are stuck.  The ministry of power has established a committee chaired by an additional secretary to finalise compensation in regard to RoW  for transmission lines in urban areas.

One solution could be the adoption of new technology. Options include laying underground cables or laying a monopole, where the cost is more but there will be less use of land. In such cases, the percentage of compensation might increase. Let the report come.

Where do you see growth coming, since power demand is tepid?

In the past four years, the southern region has come up well; the western region has been a laggard. Bihar and UP have grown. Essentially, these are growth areas for the company.

What is Power Grid's response to the Centre's plan for monetisation of assets?

We have engaged Ernst & Young, which will go into all aspects and come up with a report. If investment opportunities are clear, we will consider these.

What is the present status of international consultancy orders?

As on June, there are 13 ongoing assignments. A new order has come from Bhutan for a distribution management system. This apart, we have filed nine Expressions of Interest and techno commercial proposals  in Myanmar, Bangladesh, Kenya, Uganda, Georgia and Liberia.

What is your view on the government's move to launch Tarang, a new bidding platform for transmission? How will it help in promoting wider participation?

This is basically for transparency. Participation will be of the same level. Nothing will be manual and the decision on a successful bidder will be faster.