State-run electricity transmission utility Power Grid Corporation of India (PGCIL) is entering smart metering business, as the government plans to install 25 crore smart pre-paid meters across the country. In a recent interaction with analysts, PGCIL management said that the company will invest in the smart meter asset development business after tenders are floated by state utilities, and earn revenues through leasing model with an aim to create annuity income.
As FE recently reported, a sum of Rs 22,500 crore has been earmarked as the central government grant for the installation of 25 crore smart prepaid meters across the country under the Rs 3-lakh-crore scheme for power distribution entities (discoms) recently approved by the Cabinet. The Centre will provide Rs 900 per meter to the discoms, which comes to around 15% of the cost of these devices. According to analysts at ICICI Direct, the threshold return-on-equity of the smart metering business will not be less than 14%. As many as 25.2 lakh smart meters have already been installed across the nation, and around 81 lakh smart meters are at different stages of implementation.
PGCIL has recently approved a proposal to infuse fresh equity up to Rs 425 crore in Energy Efficiency Services (EESL), which is its joint venture company along with NTPC, PFC and REC. EESL currently runs the smart meter national programme (SMNP), under which it bears all the capital and operational expenditure for installing and running smart meters, and discoms are not required to make any upfront investment. Under SMNP, EESL has installed over 13.2 lakh smart meters in Uttar Pradesh, New Delhi, Haryana and Bihar. However, sources in PGCIL said the company will pursue the prospects of the smart metering business independently.
During Q1FY22, PGCIL reported a net profit Rs 5,998 crore, registering a year-on-year growth of 193%. It recently executed the IPO of PowerGrid Infrastructure Investment Trust, marking the first instance of a PSU in the power sector monetising its assets through the InvIT model. PGCIL owns and operates 1.7 lakh circuit kilometres of transmission lines in the country.