REC Ltd expects good prospects from the power transmission & distribution (T&D) sector in FY25, noted the company’s CMD Vivek Kumar Dewangan.
Addressing a media conference in Mumbai on April 30, 2024, Vivek Kumar Dewangan said that the power T&D sector was doing very well and REC expects healthy business opportunities from this segment.
The REC CMD stressed on the Central Government’s Revamped Distribution Sector Scheme (RDSS) for which REC is the nodal agency. Growth in REC’s lending to the power distribution sector is largely being driven by RDSS, Dewangan said.
The REC top official highlighted that counterpart funding for loss-reduction works under RDSS will start from the current fiscal year FY25. This will boost lending to the power distributions sector.
RDSS broadly involves two aspects – distribution infrastructure upgrade for loss reduction, and smart metering.
Vivek Kumar Dewangan said that REC has started financing smart metering projects being taken up by advanced metering infrastructure service providers (AMISP), which will further improve lending to the overall power distribution sector.
It may be mentioned that for smart metering works undertaken by AMISPs under RDSS, the investment is done entirely by the service provider, under what is known as the TOTEX (CAPEX + OPEX) model. No upfront investment is made by the state power distribution utility. The AMISP is compensated by the utility over a period of time, based on the utility’s improved commercial efficiency resulting from prepaid smart metering.
On the power transmission front, the REC CMD said that interstate transmission system (ISTS) projects, especially for green energy evacuation, represented a very good business opportunity.
During FY24, REC’s disbursements to the power T&D sector rose sharply by over 70 per cent to reach Rs.92,857 crore from Rs.53,987 crore in FY23. The share of the power T&D segment in REC’s total disbursements increased to 57.5 per cent in FY24 from 55.7 per cent in FY23. (See table for more parameters)
Role as bid process coordinator
REC Power Development & Consultancy Ltd (RECPDCL), a wholly-owned subsidiary of REC Ltd, acts as a bid process coordinator (BPC) for development of transmission projects under the tariff-based competitive bidding (TBCB) mechanism.
Responding to a query, V.K. Singh, Director – Projects, REC, said that currently RECPDCL had around 23 transmission projects under the bidding stage. This would largely include interstate transmission system (ISTS) schemes. Singh elaborated that 8-9 projects would be handed over to the successful bidder in the near future. Besides, RECPDCL recently won the BPC mandate for two TBCB projects, Singh added.
In its capacity as bid process coordinator, RECPDCL is expected to undertake pre-project work that mainly includes carrying out the transmission line survey. RECPDCL is also responsible for carrying out the bidder selection process, and transfer the project SPV to the successful bidder.
According to an independent study by T&D India, a total of 23 ISTS schemes were awarded under the TBCB route in FY24. Out of this, RECPDCL was the BPC for eight, while the remaining schemes were handled by the only other bid process coordinator PFC Consulting Ltd, a subsidiary of Power Finance Corporation Ltd.
Featured photograph (source: Sterling & Wilson) is for representation only.
