Power Grid Corporation of India Ltd is keen to engage with state government-owned discoms and support them in their infrastructure upgrade, PGCIL CMD said.
K. Sreekant, Chairman & Managing Director, PGCIL, said this while addressing a recent investor conference discussing the financial results for Q1 FY22.
Sreekant observed that PGCIL was already working in the power distribution space, and has developed much competency in this field. It would now like to support state government-owned discoms in improving their distribution infrastructure.
Within the power distribution space, smart metering was an area of interest, the CMD highlighted. “We have a team that has been providing designing and consultancy in the smart metering space. We are restructuring all this into a single package and provide this to the distribution entities,” was how Sreekant described the overall approach.
Much of PGCIL’s inclination has been influenced by the newly-launched revamped distribution sector scheme that has an outlay of around Rs.3 trillion. Dwelling more on the subject, Sreekant said that out of the total scheme outlay, around Rs.1 trillion will be the gross budgetary support while discoms will need to raise the remaining Rs.2 trillion through funding agencies like PFC and REC, apart from other lenders.
PGCIL was interested in supporting discoms with a low-cost funding option. It may be mentioned that PGCIL, after having sold off stake in five of its wholly-owned subsidiaries to PGCIL InvIT, has significant cash surplus. These five subsidiaries owned interstate/interregional transmission schemes that were developed under the tariff-based competitive bidding route.
Discussing the modalities further, Sreekant stressed that PGCIL would not be extending loans to discoms, but would instead make equity contribution. Some form of leasing agreement could be worked out that could provide PGCIL with a return-on-equity of around 14 per cent, and a pay-back period of 7-10 years.
The smart metering component of the reforms-linked package discussed above accounts for a significant share of the total outlay, and envisions 25 crore smart prepaid meters till the scheme’s tenure ends on March 31, 2026. Detailing PGCIL’s involvement, the CMD said that PGCIL would be doing the systems design. The main idea was to design the system and facilitate the implementation through contractors.
PGCIL would be studying various discoms that it could potentially partner with, and for this, it would also be looking at the overall credit quality of the discom’s consumers, Sreekant said.
