PGCIL is the first state-owned companies to offer an InvIT as part of the government’s brownfield asset monetization strategy, wherein the PSU is monetizing its five tariff-based competitive bidding (TBCB) assets having an enterprise value of ₹10,384 crore.
“POWERGRID Infrastructure Investment Trust (“POWERGRID InvIT” or “PGInvIT”) is issuing Units aggregating up to ₹49,934.84 million (“Fresh Issue”) and the Selling Unit holder is offering up to such number of Units aggregating up to ₹27,415.08 million in the Offer,” the state-run firm said in a statement on Monday.
This is the first InvIT by any public sector unit said Sreekant. The Cabinet Committee on Economic Affairs gave its approval in last September to plans to monetize PGCIL’s transmission projects that were won through a bidding process.
InvITs are trusts that manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects. The InvIT route was proposed by the government as an alternative fundraising route for state-run companies to manage their funding requirements without having to depend on government support.
This will be the third InvIT after IRB InvIT and India Grid Trust to be listed in India. Post the first tranche, a second tranche for the InvIT is also in the works as reported by Mint earlier.
“We haven’t still finalised what will be the second tranche and what will be the timing, but we have a pipeline of assets. Two assets worth over Rs5000 crore are in operations. Another 16 assets with about Rs17,000 crore are under construction. So, they will progressively come under (the InvIT) say I think next fiscal onwards,” Sreekant said in an interview to Mint.
PowerGrid Infrastructure Investment Trust has fixed a price band of ₹99-100 for its public issue, with the anchor investors to start bidding on 28 April. The issue will open on 29 April and close on 3 May. The InvIT is expected to attract domestic and global investors including sovereign wealth funds.
Also, with the state-run firm no longer being the Central transmission utility (CTU) with the sole right to build transmission projects in the country, has opened new areas of businesses for PGCIL, said Sreekant. Some of the areas that the power transmission major is exploring include generation, distribution, electric mobility and green hydrogen.
“As of 1 April, we are no more a CTU. So, that has thrown up opportunities in terms of we can be into generation. So that is an opportunity whether we want to be integrated, we would like to specialize in transmission, and maybe extend it to distribution or participate in the intra state transmission. Definitely intra state (transmission) is where we are already a player,” Sreekant said.
This comes in the backdrop of the proposed amendments aimed to de-license power distribution and increase competition, unleashing next-generation power sector reforms in India.
“So, these are the opportunities which are there and from time to time we will evaluate and see,” Sreekant added.
India is also working on the proposed National Hydrogen Energy Mission, which may mandate fertilizer, steel and petrochemicals industries to shift to green hydrogen. The proposal is expected to be taken up by the Union cabinet for approval shortly.
“At this moment we are not into solar generation but definitely the substations and networks that we build in the renewable rich areas, there is a potential to capture some of the energy and convert it into green hydrogen and then use it for balancing or set up storage. So, these are some of the things which we are looking at. These are still preliminary, but these are the things which we are looking at for more expansion,” Sreekant said.
Green hydrogen gas is produced by splitting water into hydrogen and oxygen using an electrolyzer, that may be powered by electricity generated from renewable energy sources.
“We have the capacity and wherewithal in building assets abroad as well. The focus which you see was mostly inward because the need for a grid expansion was significant and we were really punching above our weight… The assets which we have built in the last 10 years fiscal 2012 onwards are in excess of Rs2,27,000 crore. So that focused entirely on expanding the grid within the country, but now we see that there is opportunity abroad as well and there is a bandwidth available for us to go out and set up projects. So, definitely it is an area where we are focusing,” Sreekant said.
PGCIL’ transmission network has 169,829 circuit km of transmission lines, 257 substations and 105 GW of inter-regional electricity transmission capacity.