Ahead of its plans to launch its maiden infrastructure investment trust (InvIT), Power Grid Corporation of India Limited (Powergrid), the country’s largest power transmission company, has been on an acquisition spree. It has won five projects through the tariff-based competitive bidding (TBCB) route in 2021. Powergrid’s growth plans have been reaffirmed by the successful acquisition of other transmission assets as well. Recently, it announced plans to acquire a 74 per cent stake in Jaypee Powergrid Limited (JPL) from Jaiprakash Power Ventures Limited (JPVL).
A closer look at the assets acquired by Powergrid in recent deals…
In a meeting held on March 2, 2021, JPVL’s board of directors approved the disinvestment of 74 per cent stake in JPL. JPL will become a wholly owned subsidiary of Powergrid once the latter acquires the 74 per cent shareholding. The sale is expected to be complete by March 31, 2021. The deal will be executed for a cash consideration, with its amount being specified on the implementation of the share purchase agreement. NITI Aayog’s concurrence has been obtained.
JPL, a joint venture between Powergrid and JPVL, was incorporated on October 5, 2006 to undertake the implementation of the transmission system for evacuating power from the 1,000 MW Karcham Wangtoo HEP in Kinnaur district, Himachal Pradesh, from Wangtoo to Abdullapur in Yamunanagar, Haryana. The transmission system set up by JPL comprises a 400 kV quad bundle conductor double circuit line (219.8 km) from the Karcham Wangtoo HEP pothead yard at Wangtoo to the inter-connecting point with the northern grid at Abdullapur, which has been in commercial operation since April 1, 2012, and the LILO of the Baspa-Nathpa-Jhakri transmission line (4 km), which has been in commercial operation since June 1, 2011. The transmission line lies in hilly terrain with snowfall of up to 8 feet in some stretches. The power transmitted is meant for distribution and consumption in Himachal Pradesh, Haryana, Punjab, Uttar Pradesh and Rajasthan. The total cost of the project was around Rs 10 billion.
As of December 31, 2020, JPL has a paid-up capital of Rs 3 billion and a net worth of Rs 4.65 billion.
Portfolio growth through TBCB
In March 2021, Powergrid was selected as the successful bidder for the acquisition of the special purpose vehicle, Ramgarh New Transmission Limited (RNTL), under the TBCB route, for an aggregate value of Rs 56.1 billion. The transmission system proposed to be set up by RNTL comprises a new 400/220 kV substation, 400 kV transmission lines, and the associated substation extension works in Rajasthan. It is part of the Transmission Systems Strengthening Scheme for Evacuation of Power from Solar Energy Zones in Rajasthan (8.1 GW) under Phase II-Part A, and is proposed to be completed in 18 months.
Earlier, in February 2021, Powergrid had won four other transmission projects through the TBCB route on a build-own-operate-maintain basis, which are also part of the Transmission Systems Strengthening Scheme for Evacuation of Power from Solar Energy Zones in Rajasthan (8.1 GW) under Parts B, C, D and F of Phase II. Phase II-Part B comprises the establishment of a 765 kV D/C transmission line and associated substation extension works in Rajasthan. Phase II-Part C comprises the establishment of a new 765/400 kV substation, 765 kV D/C and 400 kV D/C transmission lines, and associated substation extension works in Rajasthan. Phase II-Part D comprises the establishment of a 765 kV D/C transmission line and associated substation extension works in Rajasthan and Uttar Pradesh. Phase II-Part F comprises the establishment of a new 400/220 kV substation, STATCOM, and substation extension works in Rajasthan, as well as 400 kV D/C transmission lines traversing Rajasthan and Haryana.
The road ahead
In January 2021, Powergrid filed draft papers for an initial public offering of its first InvIT, with the aim to raise up to Rs 49.95 billion by selling new units of the InvIT, and another Rs 30 billion through the sale of Powergrid’s units in the trust. The InvIT will initially have a portfolio of five operational TBCB projects – Powergrid Vizag Transmission Limited, Powergrid Kala Amb Transmission Limited, Powergrid Parli Transmission Limited, Powergrid Warora Transmission Limited and Powergrid Jabalpur Transmission Limited.
Going ahead, the move is expected to unlock the value of underutilised or unutilised public assets, and create a new source of revenue for further expansion for the transmission utility.