Projects worth Rs. 26,000 crore in for bid

April 20, 2015

The public-sector dominated power transmission business could soon see an influx of private players, with the Centre readying to award projects worth Rs 26,000 crore under the tariff-based competitive bidding (TBCB) route. The clutch of projects to be offered, in terms of their combined size, is more than 60 percent of all transmission sector projects awarded via TBCB over the last five years.

The Centre’s move also marks a policy rethink, given that last year projects amounting to Rs. 36,000 crore went to state-owned transmission utility Power Grid Corporation (PGCIL), overlooking the Central Electricity Authority’s stance that favored the TBCB route.

Private firms present in the power sector are keen to become integrated players by investing in the transmission sector, where the rate of return is on a par with that in the generation sector, at around 16 percent.

Companies like Sterlite Grid, L&T Infrastructure Development Projects, Essel Infraprojects, Tata Projects and Adani Power will obviously be competing to enhance their portfolio in the sector that is dominated by PGCIL. But they do have an unequal competition in PGCIL which has a robust balance sheet. Thanks to availability of comparatively cheaper finance from banks and financial institutions, PGCIL, which gets chunks of projects on nomination basis, has also grabbed 30 per-cent of the projects offered under the bidding route so far.