The Banking and Strategy Initiative

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The $12bn Infrastructure Corridor | Power Grid Corpn

India’s peak usage of around 90 GW, apart from the gap of another 60 GW from 2011, is catered by 45% thermal capacity and other plants excl co-generation. As available resources dictate location of the plant and distances are great, many problems of capacity can be solved by a more efficient grid with two important value streams building value into such a grid.

a. Supplying power from surplus regions in the north and east to the deficient areas
b. Regulating and Controlling Transmission & Distribution losses more at the Distco level in each supplied region. In the Indian scenario losses can be as high as 25%. Rajdhani Power and BSES for example can continue improving margins from controlling T&D losses

PGCIL or Power Grid Corporation of India Ltd., manages around 20GW power on a legacy grid. Its IPO will be for a nominal 10% divestment. The mandate for Power Grid is to create nine high capacity corridors primarily from sikkim, Jharkhand and Chhattisgarh to AP and Tamil Nadu and another in the west from Delhi to Maharashtra and Karnataka. The proposed cost is already more than half a trillion INR at Rs 50,000 Crs. or nearly $12bn. It seems likely that financing for the same will be closed with the help of ADB and the World Bank.

It is adding a new pooling station technology with a $1bn investment in West Bengal and will also transfer Elect. from Bhutan using those technology assets. Powergrid is planning a 37GW ‘accretion’ to its transmission capacity with the $12 bn project in 5 years adding 10% or 3600 MW in this fiscal. It is also immediately raising less than $250 mn from 15 year bonds issued last week. The bonds pay 8.84%, a pretty low tab for the tenure, coming afte a similar $150mn bond issue in the March quarter.

The IPO may raise up to $700 million. Powergrid reported a $500million profit for FY2010 and has a book value of INR38 up 10% from last year. Across the last two years they have already invested $4 billion. Their first IPO in 2007 sold 13.5% of Govt equity and since then growing investments have kept pace with the Indian power dream.

POWERGRID operated around 75,289 ckt. kms. of transmission lines along with 124 Sub-stations as on March 31, 2010. Average availability of transmission systems during the year 2009-10 was maintained at 99.77% with the use of state-of-the-art preventive maintenance techniques. POWERGRID continues to wheel about 50% of total power generated in the country through its transmission network

Also in recent news Chinese vendors have been asked to set up shop in India if they want to participate in local bids

One comment on “The $12bn Infrastructure Corridor | Power Grid Corpn

  1. Pingback: Tweets that mention The $12bn Infrastructure Corridor | Power Grid Corpn | The Banking and Strategy Initiative --

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