Apraava Energy, which already has a portfolio of acquired power transmission assets, recently won its very first set of greenfield projects through the competitive bidding route. In this exclusive interaction, we have Naveen Munjal, Director – Business Development & Commercial, Apraava Energy, taking us through his company’s journey in the power transmission space, and discussing why Apraava Energy has identified this sector as a growth area. Naveen Munjal also shares his views on project execution challenges, whilst offering keen insights on policy-related matters like the e-reverse auction process in the tariff-based competitive bidding (TBCB) mechanism. An interview by Venugopal Pillai.
Can we presume that the two ISTS schemes won by Apraava Energy in August 2023 – Fatehgarh III and Fatehgarh IV – in August last year, marks Apraava Energy’s entry in the greenfield interstate power development space?
Certainly! We have been keen to enter the transmission greenfield space for quite a while. We first started participating in bids in 2006-07, when the sector was opened up for private investment. There were periods of inactivity, but we have renewed our focus since early 2022, making it to the reverse auction stage on several bids. In a space of 12 months, starting March 2023, we managed to win four bids.
What is the current status of the two Fatehgarh projects? Specifically, has physical work already started?
The Fatehgarh III and Fatehgarh IV projects are currently under construction. On-ground work started in Q4 2023. All the major contracts have been placed.
With respect to Fatehgarh III in particular, what project execution challenges do you anticipate given that the project involves a 200-km-plus transmission line? What is the status with respect to right-of-way?
We face the same challenges as most other greenfield transmission projects. Securing right of way (RoW) remains the single biggest challenge in the construction of transmission lines, including Fatehgarh III. The challenge is compounded by the fact that the route passes through areas that are witnessing substantial growth in economic activity. The land parcels in the area have been acquired, or are being acquired, by renewable energy (RE) developers, resulting in the narrowing of available corridors for setting up high voltage transmission lines. Moreover, Rajasthan does not have specific RoW compensation guidelines for laying transmission lines. We are in constant touch with the local authorities, seeking their support in addressing this challenge.
More recently, Apraava Energy won another ISTS project — Karera Transmission — under the TBCB mechanism. What is the project scope in brief and when do you expect physical work to start?
Yes, in December 2023, Apraava secured the WRES XXXIII (Part B) Transmission project. The SPV (Karera Power Transmission) was taken over in February 2024. The scope of work for the project includes construction of a 765kV pooling substation at Karera (Madhya Pradesh) along with a Line-In Line-Out (LILO) of 765kV double-circuit transmission line. The project is currently in the pre-development stage, and physical work is expected to commence shortly.
Tell us in brief about the CERC-related formalities like securing interstate transmission licence and tariff adoption for the three projects.
Fatehgarh III & IV have already received approval from the CERC with the granting of transmission license and adoption of tariff. This paves the way for project implementation. Meanwhile, formalities for the Karera project are progressing steadily.
Over the past few months, a number of new entrants have entered the ISTS-TBCB power transmission development space. What is your reading of the situation?
The power transmission sector has already witnessed a round of consolidations. Only a handful of serious players are active today and they have been participating in tariff-based competitive bidding projects for a while with some, like Apraava, emerging successful starting recently; this has been the case on account of intense competition and fewer available opportunities.
In the recent past however, multiple transmission projects have been notified to address the evacuation requirements of upcoming renewable projects. As per Government estimates, investments of approximately Rs.2 trillion are expected in the transmission sector between now and 2030 for meeting the 500 GW renewable capacity target. This will provide a large pool of opportunities for all active players in the sector, including the new entrants.
Some industry observers believe that in the bidding process for ISTS-TBCB projects, the e-reverse auction (e-RA) could create intense competition resulting in unrealistic tariffs. What is your reading of the situation?
In the power transmission sector, around 70 per cent of the project cost is dependent on equipment and commodity prices, which in turn are driven by multiple factors including global demand/supply and are therefore dynamic and not within the control of any bidder.
The intense competition during reverse auction process sometimes compels bidders to take aggressive calls on these factors, which can subsequently have an adverse impact on the financial viability of these projects. Given that power transmission is a part of the nation’s critical infrastructure, such aggression is certainly not in the interest of the sector.
Speaking of your existing portfolio, when do you expect to acquire full equity stake in the brownfield asset Kohima Mariani Transmission Ltd?
The equity stake in Kohima Mariani Transmission Ltd is being acquired by Apraava Energy in a phased manner as per the terms and condition of the Transmission Service Agreement. The remaining 26 per cent of the equity is scheduled to be acquired in December 2025, which is five years from the COD of the project.
Several states are also planning to use the TBCB route for developing intrastate schemes. Would Apraava Energy be pursuing opportunities?
Apraava is in the sector for the long run and committed to playing a key role in India’s energy story. We are keen to explore all investment opportunities that fit into our investment criteria.
How do you see the opportunity for Apraava Energy in the power transmission development space, given that significant investment is anticipated in development of the ISTS network?
As I mentioned before, the power transmission sector offers a huge opportunity for all serious players. It is one of the identified growth areas for Apraava Energy, and we will continue to explore, and invest in, selected opportunities and contribute to India’s target of setting up 500 GW RE capacity by 2030.
All project photographs seen in this interview pertain to Apraava Energy’s power transmission portfolio — Kohima Mariami Transmission Ltd and Satpura Transco Pvt Ltd.
