PGCIL has set itself a target of completing work for nearly Rs 1.2 lakh crore worth over the next four years. The projects already in the pipeline include unfinished parts of 11 high-capacity corridors across the country, along with two phases of the green corridor.
The Centre is likely to kick-off its asset recycling plans with the Rs 16,600-crore state-owned transmission major Power Grid Corporation of India Ltd. The concept is being pushed by the finance ministry to kickstart the investment cycle by getting state-owned companies to exit operational ventures and leverage the funds to set up new units.
PGCIL, which has stakes in close to a dozen joint venture projects and special purpose vehicles set up in partnership with state-owned utilities and private players for executing transmission lines, could be asked to exit and monetise its transmission lines and tower assets in venture that have been set up and where a revenue stream in already in place. Of these, at least five JVs where PGCIL has an equity stake, are operational.
The move to push the public sector to step up investments comes at a time when attempts to rekindle the private sector’s investment appetite have largely failed to yield results. The PGCIL proposal, which has been forwarded by finance ministry and is under consideration in the power ministry, aims to cut the utility’s debt and channel the freed up capital to set up new transmission projects.
Till December 2015, PGCIL’s projects that were under various stages of implementation cumulatively added up to an aggregate cost of nearly Rs 90,000 crore. Additionally, there are projects worth Rs 30,000 crore that the company is in the process of tendering out. PGCIL has set itself a target of completing work for nearly Rs 1.2 lakh crore worth over the next four years. The projects already in the pipeline include unfinished parts of 11 high-capacity corridors across the country, along with two phases of the green corridor.
Sources in the government said PGCIL is in the process of appointing a domestic consultant to draw a roadmap for monetising or selling its transmission assets. Finance minister Arun Jaitley had in the Budget for 2016-17 announced government’s intention of PSUs pursuing asset recycling plans as part of the broader agenda of disinvestment.
Incidentally, the Comptroller and Auditor General had, in a report last year, found the PGCIL had “incorrectly evaluated” and awarded seven transmission tower contracts worth Rs 927.69 crore to financially weak joint venture companies between February 2010 and July 2010.
The CAG in its report on Central companies laid in the Lok Sabha last year had found that the incorrect award of the contracts led to cost overruns, delay in completion of works and transmission constraints.
The awards were made to three joint venture companies led by SPIC-SMO, a division of Southern Petrochemical Industries Corporation. The contracts were for strengthening scheme for Sasan and Munda ultra mega power projects as well as strengthening the Central part of the Northern Grid.
“The fact remains that the Board (of PGCIL) decision was based on favourable recommendations of the assessment committee which downplayed the actual financial condition of SPIC and did not report crucial information about impeding sale of SPIC-SMO,” the report had stated.
The assessment committee comprised representatives from finance, engineering and contract services department of PGCIL.