IndiGrid set to acquire another transmission asset from Sterlite Power

IndiGrid, India’s first infrastructure investment trust (InvIT), has approved the acquisition of East North Interconnection Transmission Company Ltd (“ENICL”) from Sterlite Power at a value of Rs.1,020 crore This acquisition would increase the assets under management (AUM) of IndiGrid by 10 per cent to around Rs.12,100 crore.

ENICL is part of Inter State Transmission Scheme (ISTS) network and consists of two 400kV transmission lines with a total of around 900 ckm across Assam, Bihar and West Bengal. It is a strategic asset which is crucial for power exchange across north eastern and eastern region of India.

IndiGrid’s portfolio will increase to nine power transmission projects with a total network of 20 power transmission lines that span more than 5,800 ckm across 13 Indian states, post this acquisition.

This acquisition will be funded by internal accruals, proceeds from the preference issue done in May 2019 and new debt, a release from IndiGrid said. The acquisition is expected to be consummated during Q4 FY20, subject to mandatory approvals. Upon acquisition of ENICL, IndiGrid’s net debt/AUM will continue to be below 49 per cent.

Commenting on the acquisition, Harsh Shah, Chief Executive Officer, IndiGrid, said “Our strategy is to focus on accretive acquisitions to provide superior total returns to investors. In line with that, we propose to acquire ENICL which would result in accretion for unitholders. IndiGrid has another pipeline of around Rs.6,500 crore of transmission projects under the framework agreement with Sterlite Power to reach an AUM of Rs.18,000 crore over next two years.”

Overview of ENICL

• Project was awarded on “BOOM” basis to Sterlite Power under the TBCB mode
• Transmission Service Agreement Date: March 31, 2010
• Grant of transmission licence by CERC: October 2010 (for a period of 25 years)
• Objective: To evacuate power from eastern and northeastern region of India
• Project outline: 2 EHV lines of 400kV spread over Assam, Bihar and West Bengal
  • Bongaigaon-Siliguri (Assam, WB; 443 ckm; commissioned in November 2014)
  • Purnia-Biharsharif (Bihar; 466 ckm; commissioned in September 2013)

(Featured photograph shows a section of the East-North Interconnection project. Photo Source: IndiGrid)