India Grid Trust (IndiGrid) has announced that has signed a share purchase agreement to acquire 74 per cent equity stake in Parbati Koldam Transmission Company Ltd from Reliance Infrastructure Ltd (RInfra).
In a stock exchange filing, IndiGrid said that the SPA was signed on November 28, 2020 and that the completion of the acquisition process would depend on receipt of necessary approvals and completion of contractual obligations.
RInfra owns 74 per cent equity stake in Parbati Koldam Transmission Company Ltd (PKTCL) with the remaining 26 per cent held by Power Grid Corporation of India Ltd (PGCIL).
The acquisition of PKTCL is in line with the IndiGrid investment strategy as provided in the Trust Deed with a focus to ensure stable distribution to unitholders by owning assets with long term contracts, IndiGrid said.
The enterprise value of PKTCL (for 100 per cent equity) is around Rs.900 crore, IndiGrid said. It may be reiterated that IndiGrid would be acquiring 74 per cent stake in PKTCL, which is why its acquisition cost will be proportionately lower than the estimated enterprise value stated.
PKTCL has an equity capital of Rs.272.84 crore and a net worth of Rs.440.15 crore, as of March 31, 2020. In FY20, PKTCL had a total revenue of around Rs.209 crore.
Background
PKTCL was formed in September 2002 as a joint venture between PGCIL (26 per cent) and RInfra (74 per cent). The company was formed to develop, own and manage power transmission infrastructure for evacuation from the 800-mw Parbati-II hydropower project of NHPC and the 800-mw Koldam hydropower project of NTPC. Parbati-II, a run-of-river scheme on River Kullu in Himachal Pradesh, is expected to commission by March 2022. The Koldam project, also in Himachal Pradesh, is fully operational. Incidentally, the Koldam project marks the diversification of thermal-centric NTPC into hydropower.
PKTCL operates around 458 ckm of transmission lines that make the inter-state transmission system for power evacuation from Parbati-II and Koldam projects. PKTCL signed the transmission service agreement (TSA) with PGCIL in December 2013.
PGCIL’s joint-venture phase
PKTCL represents India’s early and innovative steps to initiate private sector enterprise in the power transmission space. This was in the early part of 2000s and much before the tariff based competitive bidding mechanism was introduced in January 2011.
PGCIL decided to form joint ventures with private sector developers for setting up transmission system associated with their upcoming hydropower and thermal power projects. Such joint ventures were formed with Essar Power, ONGC-IL&FS, Torrent Power, Essar Power, Jaiprakash (Jaypee) Group, Lanco Group, etc. Each of these private entities was developing a mega thermal and hydropower project. In all these joint ventures, PGCIL held a minority 26 per cent stake with the private developer owning the majority 74 per cent.
PGCIL also pursued the formation of JVs with private sector entities that were not developers of power generation projects. In this case, the private sector entity, which would have 74 per cent equity stake, was to be selected using competitive bidding. PKTCL was formed accordingly with Reliance Infrastructure (RInfra) being the selected private entity.
Featured photograph (source: NTPC) shows NTPC’s 800-mw Koldam hydropower project in Himachal Pradesh. Parbati Koldam Transmission Company Ltd is responsible for power evacuation from the Koldam HEP as well as the under-construction 800-mw Parbati (Stage 2) hydropower project of NHPC.
