This is the first time a PSU in the power sector will monetise its assets through the InvIT model and use the proceeds to fund new and under-construction capital projects.
The PowerGrid InVIT units are proposed to be listed on the National Stock Exchange and the BSE.
State-run electricity transmission utility Power Grid Corporation of India (PGCIL) on Wednesday filed a draft offer document with the Security and Exchange Board of India (Sebi), seeking to monetise some of its assets through PGlnvlT, the infrastructure investment trust (InvIT) recently formed by the company.
Though the valuation the assets to be put up for sale through the proposed initial public offer has not been mentioned by PGCIL in the stock exchange filing, five transmission lines worth Rs 7,000 crore are seen to be up for grabs. This is the first time a PSU in the power sector will monetise its assets through the InvIT model and use the proceeds to fund new and under-construction capital projects.
After the Cabinet approved the monetisation of PGCIL assets through InvIT in September 2020, the company had earmarked five special purpose vehicles (SPVs) which own separate operational transmission systems under “assets classified as held for sale”. The aforementioned SPVs are PowerGrid Warora Transmission (valued at Rs 2,099 crore), PowerGrid Parli Transmission (Rs 1,752 crore), PowerGrid Jabalpur Transmission (Rs 1,490 crore), PowerGrid Vizag Transmission (Rs 1,061 crore) and PowerGrid Kala Amb Transmission (Rs 274 crore).
All the five SPVs have 35 years of transmission service agreement with their respective customers and their revenue flows are insulated from demand, supply and price fluctuation of power tariff. As on September 30, 2020, all the five SPVs had no external debt, and their entire borrowings from PGCIL are expected to be replaced by loan from the InvIT.
The government expects PGCIL’s InvIT to attract both domestic as well as global investors including sovereign wealth funds, pension funds and mutual funds.