Powergrid to up output, may invest Rs 55000 cr in 5 years

To keep pace with the planned increase in power generation capacity, transmission giant Powergrid Corporation of India (PGCIL) plans to triple investments during the Eleventh Plan (2007-12) to up its transmission capacity to more than three-fold.

PGCIL may invest Rs 55,000 crore in the the next five years compared with Rs 18,000 crore in the past five years to achieve an inter-regional transmission target of 37,200 mw. The current inter-regional transmission capacity stands at 11,500 mw.

"PGCIL has been overperforming," said RP Singh, company's chairman and managing director.

In 2006-07, against the planned annual investment of Rs 4,950 crore, PGCIL will be investing Rs 6,000 crore. "Companies generally reduce their original targets, but Powergrid has increased it by 20-25 per cent because there is demand in transmission," Singh said.

PGCIL, which is headed for a public listing in April-May 2007, posted a net profit of Rs 1,009 crore in 2005-06 on a turnover of Rs 3,554 crore. The funds for investment will come from internal resources, multilateral funding agencies (ADB and World Bank), bilateral funding, bonds and domestic loans.

About 70 per cent of the proposed Rs 55,000 crore investment will be financed through debt, while the balance will be funded through equity.

The company also plans to go for Hybrid Ultra High Voltage Transmission System, which will reduce transmission losses, by 2012.

Rebutting claims that PGCIL is warding off private sector entry into the transmission sector, Singh detailed the names of the private companies such as Torrent Power and Jaiprakash Power with which PGCIL has tied up.

Besides, talks are on with Essar Power, Oil and Natural Gas Corporation (ONGC and IL&FS combine for executing transmission projects. "There is a requirement of Rs 71,000 crore in the transmission sector by 2012 and private participation is necessary for this. We understand that," Singh added.

All the projects are likely to be executed at a debt-equity ratio of 70:30.

PGCIL is also facilitating the independent power transmission company (IPTC) route as part of Western Region Strengthening Scheme (WRSS). The government has also roped in PGCIL for building transmission lines for the ultra mega power projects. The cost for which would be around Rs 4,000-5,000 crore per project. The problems private companies face in transmission are land clearance and environmental issues.