Power Grid Corporation of India Ltd (PGCIL) is confident of meeting its Rs.18,000-crore capitalization target set for the current fiscal year, FY25, thanks to the anticipated commissioning of several large projects in the remaining months of the year.
During the first nine months (9M: April to December) of FY25, PGCIL’s cumulative consolidated capitalization stood at Rs.7,423 crore as against Rs.5,780 crore in the same period of FY24 (See table).
Addressing an investor conference, R.K. Tyagi, Chairman & Managing Director, PGCIL, said that up to January 31, 2025, the consolidated capitalization in FY25 was around Rs.7,906 crore.
PGCIL has set a target of around Rs.18,000 crore for consolidated capex for FY25. This would mean commissioning of projects worth around Rs.10,000 crore in the remaining two months (February and March) of FY25. In other words, it implies that in just two months, PGCIL needs to achieve a quantum of capitalization that would be more than the actual achievement of ten months (April 2024 to January 2025).
Tyagi defended the capitalization target, observing that PGCIL was expecting to commission assets worth around Rs.10,000 crore by March 31, 2025, which would be in addition to the capitalization already achieved up to January 31, 2025.
In support of the claim, the CMD named a series of projects that were on the verge of completion. These included a substation and associated transmission line at Narela near New Delhi, two pooling stations (KPS2 and KPS3) and associated infrastructure at Khavda in Gujarat. Besides, some transmission lines like Ahmedabad-Banaskantha and Navsari-Magarwada along with the Navsari GIS substation, all in Gujarat, are also likely to commissioned by end of FY25. Tyagi added that best efforts are being directed towards commissioning of several other transmission assets spread over Karnataka, Rajasthan and the northeastern region.
Capitalization to increase
R.K. Tyagi also noted that PGCIL is poised to achieve higher levels of capitalization in the coming years, thanks to the sharply growing value of projects on hand. The PGCIL top official estimated that excluding HVDC projects, the company expected to commission Rs.1,08,000 crore worth of projects – both RTM and TBCB — in the coming four years or so. Accordingly, Tyagi put the estimate of consolidated capitalization for FY26 at around Rs.35,000 crore.
Towards faster commissioning
R.K. Tyagi observed that PGCIL has to very often contend with project execution challenges on various fronts. For instance, the pace of transmission line erection can be frustrated by right-of-way (RoW) challenges. To mitigate RoW-related concerns, PGCIL expeditiously takes up these issues with the Union power ministry as well as state governments concerned, Tyagi noted. Regarding equipment, delays in procuring high-rating transformers and gas-insulated switchgear (GIS) was a challenge that PGCIL was addressing by way of bulk procurement of standardized items, irrespective of the projects in hand.
What is capitalization?
Capitalization broadly implies the amount of capital expenditure (capex) that has translated into commercial assets. The term “consolidated capitalization” stands for capitalization achieved by PGCIL (standalone) along with that of its subsidiaries. In general terms, PGCIL implements project under the regulated tariff mechanism, which are taken directly on PGCIL’s balance sheet. These represent “standalone” projects. Projects under the tariff-based competitive bidding (TBCB) mechanism are implemented by wholly-owned subsidiaries of PGCIL. Such projects. along with the “standalone” projects, constitute the “consolidated” picture.
Also read: PGCIL committee approves Rs.429-crore capex in two projects
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