Five assets have been identified for monetization with respect to the newly-formed Powergrid Infrastructure Investment Trust (InvIT), according to an investor presentation by Power Grid Corporation of India Ltd (PGCIL).
The five assets represent operational transmission assets developed by PGCIL, through wholly-owned subsidiaries acting as dedicated special purpose vehicles, under the build, own, operate, maintain (BOOM) modality. These projects were awarded to PGCIL under the tariff-based competitive bidding (TBCB) guidelines.
The five transmission assets (along with these commissioning dates) are:
- Powergrid Warora Transmission Ltd [July 2018]
- Powergrid Parli Transmission Ltd [June 2018]
- Powergrid Jabalpur Transmission Ltd [December 2018]
- Powergrid Kala Amb Transmission Ltd [July 2017]
- Powergrid Vizag Transmission Ltd [September 2016]
The aggregate gross block of these five assets is estimated to be Rs.7,200 crore, as of September 30, 2020.
Rationale of InvIT: Currently, PGCIL meets its capital expenditure through internal accruals and debt. Now, a new financing window, in the form of InvIT, opens for PGCIL. Not only would PGCIL be able to finance its new and ongoing capex plans but the premium earned from this asset monetization will help shore up the company’s net worth.
Also read: Tata Power To Raise Rs.2,600 Crore Through Preferential Equity, Plans InvIT
PGCIL’s InvIT journey
February 2019: The Union Budget 2019-20 emphasizes the need for innovative financing models, including infrastructure investment trusts (InvIT) for infrastructure development.
September 2020: The Cabinet Committee on Economic Affairs (CCEA) approves monetization of assets of PGCIL through the Infrastructure Investment Trust (InvIT) model. With this, PGCIL becomes the first public sector undertaking under the Union power ministry to get such approval.
January 2021: Securities & Exchanges Board of India (SEBI) grants certificate of registration to “Powergrid Infrastructure Investment Trust”, an infrastructure investment trust (InvIT) sponsored by Power Grid Corporation of India Ltd. The certificate of registration was granted on January 7, 2021, with the registration number of the infrastructure investment trust being “IN/InvIT/20-21/0016”.
IndiGrid
Sponsored by Sterlite Power, India Grid Trust (IndiGrid) is India’s first InvIT in the power sector. Currently, it has assets under management (AUM) of around Rs.15,000 crore with an AUM target of Rs.30,000 crore by end of 2022.
