Power Grid wants to venture into new areas such as distribution.
That transmission giant Power Grid Corporation of India is on the shortlist of nine "maharatna" companies is not surprising. With an effective monopoly in the inter-regional transmission space – the company accounts for over 99 per cent of the total inter-regional capacity — it offers a veritable backbone for the country's power sector. One of the largest transmission utilities in the world, Power Grid’s still growing.
Since its inception 17 years back, the company’s transmission assets have grown multifold from a mere 22,000 circuit kilometers (ckm) to over 70,000 ckm currently. Assets are now being expanded at a much faster pace;there are plans to add 5,500 ckm of transmission lines (along with 6,285 mega volt amperes (MVA) of transformation capacity)in the current year.
Based on its performance in such a short span of time, Power Grid was accorded the Miniratna status about 10 years back. Since then, the company has managed over 99.6 per cent operational availability and also earned incentives that such performance allows, justifying its Navratna status.
While its business model allows assured returns on its investments, these returns are regulated. But delays in power capacity additions, which are fairly common, could leave transmission capacity idle. Power Grid recently scaled down its Rs 8,000 crore investment plan in the current year because of delays in capacity addition at large hydroelectric project.
However, the company plans to invest over Rs 55,000 crore by the end of the current plan period (2007-2012) as against Rs 18,000 crore invested in the last plan. There’s also a 100 per cent increase in capex in the next plan. “Our 12th Plan investments will cross Rs 1 lakh crore,” says Chairman and Managing Director, S K Chaturvedi. Power Grid’s inventory of projects is enough to keep it busy for many years to come. That’s good news for suppliers . “We will require almost one transformer a month,” says Chaturvedi.
Power Grid is looking to be an integrated power major: it has already made inroads into telecom and consultancy — where the targets envisaged have been met — and now want to be in distribution. Revenues from the telecom business last year increased by more than 60 per cent to Rs 125 crore and could cross Rs 200 crore in the current year and Rs 400 crore next year. “Both telecom and consultancy are doing very well. We will break even in telecom this year, two years ahead of the plan,” Chaturvedi observes.
The company also reported revenues of Rs 235 crore from consultancy fees during the year. Of course, the fact that there’s no significant private sector activity in the transmission sector, given the regulated return scenario, has helped. “If the margins aren’t enough, private players will not come and that’s why there will be fewer private players in transmission,” points out Chaturvedi. Power Grid’s not complaining though, it’s making the most of its monopoly.
