Power Grid lines up Rs 12k crore for diversification

Power Grid Corporation of India is in the process of raising over $3 billion to meet its capital expenditure plans of Rs 55,000 crore for the eleventh five-year plan period.

Simultaneously, the state-run power transmission major is planning foray into the entertainment and telecom businesses so as to utilise its infrastructure, especially for the latter.

The company is in talks with the World Bank and the Asian Development Bank (ADB) to avail loans of $600 million from each.

While the talks with the World Bank will conclude by February, negotiations with ADB will begin in the same month. Besides, efforts are also on to avail loans of $1 billion each from the World Bank and ADB without government guarantee.

"If this materialises (the loans), it could open up new windows of opportunity for investing in India's power transmission and distribution sector," said R P Singh, chairman and managing director, Power Grid.

The company hopes to mobilise about Rs 20,000 crore from the private sector, at a 70:30 debt-equity ratio. "If the private sector investments are below the target, we will go in for equity dilution up to 80:20 per cent, to raise the requisite funds for our projects," he added.

Power Grid is in talks with a state and a private player to launch entertainment services through a joint venture.

"The company is also planning to enter the tower business, data centre management, gigabit knowledge network and voice over internet, utilising its nationwide power transmission network," said R P Singh.

"Our plans are to get into the A to Z of telecom and its related businesses. We will invest as and when required, depending on the returns. Returns from this business are as high as 20-23 per cent, much higher than what we get from power transmission," he said.

He declined to name the joint venture partners citing the confidentiality agreement. Power Grid, which carries 45 per cent of the power generated in India, already has a 19,000 km long fibre-optic telecom network, part of its power transmission infrastructure, and has already leased bandwidth to various telecom companies.

During financial year of 2007-08, telecom revenues for the company increased to about Rs 90 crore for the nine months ending December 2007, from Rs 51 crore for the corresponding period in the previous year.

Singh said the firm has orders worth Rs 300 crore for the quarter ended December 31, 2007, and is hoping for Rs 500 crore-plus turnover from the telecom and entertainment businesses by next financial year.

The company will soon float global tenders worth over $1 billion to develop transmission grids which will transmit power from the NE region to supply the north and western parts of the country.