Power Grid Corporation of India Ltd (PGCIL) anticipates more TBCB-based business opportunities in interstate transmission system (ISTS) schemes rather than the intrastate counterpart.
Addressing an investor conference, Mohammed Taj Mukarram, Director – Finance, PGCIL, said that opportunities in the intrastate transmission system (InSTS) are not very promising as not many states are using the TBCB modality to develop their transmission infrastructure.
In an investor presentation, PGCIL estimated that the business opportunity size in the overall TBCB space is around Rs.31,850 crore. Of this, only around Rs.2,050 crore is expected to come from InSTS projects. This InSTS business opportunity consists of two TBCB projects in the bidding stage, both in Madhya Pradesh, Mukarram noted.
On the other hand, the ISTS landscape has 22 projects under bidding, collectively worth Rs.21,200 crore. Besides, there are ten projects, valued at Rs.8,600 crore, where bidding is yet to be initiated.
Most of the ISTS-based transmission schemes under bidding are located in Gujarat and Rajasthan, and entail evacuation of renewable energy, the PGCIL official observed.
Work in hand
As of March 31, 2022, PGCIL had work-in-hand worth Rs.53,300 crore, Mohammed Taj Mukarram, noted. Out of this, ongoing projects accounted for Rs.6,700 crore and new projects had a share of Rs.31,800 crore. New projects are those on which construction work had yet to begin, Mukarram explained. The remaining Rs.14,800 crore came from TBCB projects.
As discussed in a separate story, PGCIL had 18 TBCB subsidiaries, as of March 31, 2022. Of these, six were commissioned in FY22 and the remaining 12 were under stages of implementation. [These TBCB subsidiaries do not include five that were monetized by way of sale to Power Grid InvIT.]
Also read: PGCIL To Acquire IEDCL’s Stake In Cross Border Power Transmission Co
Revival of capex
Mohammed Taj Mukarram was of the view that the ISTS-based projects will attract tremendous investment in the coming years and this would mean significant business opportunity for PGCIL. It may be noted that ISTS projects are awarded largely under the TBCB modality but they also include projects on the RTM (regulated tariff mechanism) basis that are awarded directly to PGCIL.
According to forecasts made by Central Transmission Utility India Ltd (CTUIL), in the period FY23 to FY27, a total investment of around Rs.1,25,000 crore will be made in developing new capacities in the interstate transmission system. This would entail around 32,000 ckm of new transmission lines and over 2 lakh MVA of transformation (substation) capacity. (See table).
In view of this, Mukarram strongly felt that there would be a revival in the capital expenditure numbers for PGCIL, in the coming years. Based in statistics available with T&D India, PGCIL has been witnessing capital expenditure in the range of Rs.7,000 crore to Rs.10,000 crore per year, over the past 4-5 years. This is significantly lower than the ruling levels in preceding years. For instance, in the XI and XII Plan periods (FY08 to FY17), the average capital expenditure by PGCIL was in the range of Rs.20,000 crore per year.
It should also be noted that PGCIL in recent years has been witnessing higher asset capitalization in recent years. This, in turn, reflects the higher capital expenditure undertaken in the earlier years.
Featured photograph (source: GE T&D India) is for representation only
