State-run PoweGrid Corporation of India is planning to transfer transmission assets worth around Rs 7,500 crore to the newly launched Powergrid infrastructure investment trust (PGInvIT) in FY23. The company has identified a couple of large assets together valued at Rs 5,000 crore for the transfer, along with its 26% stake in one of the existing special purpose vehicles.
People close to the development told FE that Power Grid Southern Interconnector Transmission System project, and the Nagapattinam Madhugiri Transmission line are the two major assets that are likely to be transferred to PGInvIT. “Besides, there will be a few other small projects. The sponsor (PGCIL) will also transfer part of the residual 26% stake it holds in Powergrid Vizag Transmission to the InvIT,”a source said.
PGCIL on May 14 transferred its 74% stake in five transmission SPVs to PGInvIT to raise Rs 2,736 crore through offer for sale.
Powergrid at present operates eight inter-state tariff based competitive bidding (TBCB) projects, which includes three renewable energy linked projects, and one intra-state transmission line. There are 10 under construction TBCB projects that includes six renewable energy-linked ones and one intra-state project. These 18 projects will also be transferred to the InvIT over a course of time.
The company is also open to evaluate transfer of cost-plus or the regulated tariff mechanism (RTM) projects to the InvIT as part of central government’s Rs 42,500 crore national monetisation pipeline (NMP) programme.
“Unlike SPVs, the RTM projects will have to be carved out from the consolidated balance sheet, and there could be tax related issues that will have to be sorted. However, the possibility is not ruled out,” the source quoted above said.
In the first six months since the InvIT was launched on May 14, it has distributed a dividend of Rs 4.50 per unit. “We do not foresee any challenges going ahead as our revenues are well protected with long term transmission service agreements (TSAs) of over 35 years. Also, the dividends are guaranteed by Sebi through distribution of 90% of net distributable cash flow to the investors twice a year,” said another source.
Of PGInvIT’s total income of Rs 522.54 crore in H1FY22, the net distributable cash flow was Rs 409.62 crore.