Facing slowdown, India's power grid manager eyes telecom, consultancy

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India’s state-owned power transmission behemoth and central transmission utility, Power Grid Corporation of India Ltd. (PGCIL), is bearing the brunt of the slowdown in power generation and now looking to expand in different business areas. The company is planning to increase its footprint in telecom infrastructure, overseas consultancy and transmission network for renewable energy.

The company’s capital work in progress has been on a downslide for past four years. Since 2015, it has come down by 41 per cent to Rs 329 billion, owing to decreasing projects. Apart from state-owned NTPC, which is adding capacity, no private power generator has applied for ‘long-term access’, or transmission connectivity for conventional generation, since 2013.

I S JH, CMD, PGCIL however clarified that quantum of new transmission project has reduced but the company has strong order book of Rs 900 billion to be commissioned in the next 3 years. 

“Reduction in capital work in progress is basically because we have improved our capital efficiency i.e. shortening the turn-around time by applying efficient project management techniques as well as getting support from Ministry of Power, PRAGATI review for expeditious completion of projects,” he told Business Standard.   

The load on the network is increasing with the rise in power demand, Jha said, which will improve the plant load factor of generating stations (the operating ratio) also. 

“For now the projects that are in the market are mainly for renewable generation, NTPC generation projects, system strengthening from states and  system required for change of direction for power supply due to mismatched demand-supply planning in most cases,” Jha said.

He added Green Energy Corridors (GEC) – to facilitate transmission system for renewable energy — offers a great opportunity for the company as India aims to add record 175 GW of green energy by 2022.

PGCIL is currently building a transmission network for 30,000 MW of green energy at an estimated cost of Rs 8 billion under GEC-I. Officials said the land is yet to be identified for the balance renewable energy capacity that is being planned by the government. For GEC-II, which aims to connect mega size solar power parks with the grid, the transmission network would be offered through competitive bidding. For a stipulated generation capacity, transmission network needs to be built beforehand.

Cost for transmission system of renewable energy generation is less than that of conventional energy as they are located near to demand. At the same time, the government has reduced the ISTS charges to zero for transmitting renewable power.

While the income from transmission charges has maintained a steady growth in PGCIL, it is the telecom and consultancy businesses that have grown more in proportion to the core power business. In 2017-18, telecom and consultancy businesses of PGCIL registered a growth of 25 per cent and 29 per cent respectively.

PGCIL plans to expand its overseas consultancy business in neighboring countries such as Nepal, Sri Lanka and Bangladesh. It is also looking at emerging markets in African and Latin American nations. PGCIL recently participated in competitive bidding in Brazil for transmission projects.

The company is in discussions with leading telecom tower companies such as BSNL and Indus Towers, among others, to utilise its existing infrastructure for improving reach and bandwidth connectivity.


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