Mumbai: Power transmission utility Power Grid Corp. of India Ltd (PGCIL) is in talks with other state-controlled companies, including National Aluminium Co. Ltd (Nalco) and Rashtriya Ispat Nigam Ltd (RINL), to form joint ventures (JVs) to make conductors and towers.
Partnership mode: R.N. Nayak, PGCIL’s chairman and managing director.
PGCIL is also exploring the possibility of setting up JVs for important equipment such as transformers, reactors and insulators, R.N. Nayak, chairman and managing director, said in an interview on Friday on the sidelines of a press conference to report the company’s third-quarter earnings.
“Many equipment manufacturers are entering the transmission line construction business, and on the basis of their inherent strength in manufacturing, they are bidding aggressively to bag projects in a bid to remain competitive,” Nayak said. “In such a scenario, we also need to create our own manufacturing base.”
He declined to give details, saying “things are still at a preliminary stage”.
PGCIL lost its monopoly in January last year for inter-state power transmission projects after the power ministry changed the rules for such projects and made it mandatory to award them only on tariff-based bidding to attract private investment.
The power ministry plans to award six so-called ultra-mega transmission projects. So far, three such projects have been awarded, out of which two were won by Anil Ambani-controlled Reliance Infrastructure Ltd and Sterlite Technologies Ltd.
These projects are auctioned on the so-called built, operate and transfer basis, and the bidder quoting the lowest tariff for transmitting the power gets the rights to develop a particular transmission corridor.
PGCIL’s plans to enter the equipment manufacturing business through JVs with equipment manufacturers will help it become more competitive against private sector companies that are bidding aggressively for transmission projects in the country, analysts say.
Kameswara Rao, executive director and leader of utility, mining and infrastructure practice at consulting firm PricewaterhouseCoopers Pvt. Ltd, said, “PGCIL is a bit slow in exploring possibilities of JVs as the government made tariff-based bidding mandatory last year, but considering it is a public sector company and the constraints under which such companies operate, it is understandable. But such JVs will definitely help PGCIL offer competitive tariffs and win projects as PGCIL has its own strengths like a vast pool of technically qualified human resources.”
Ramesh Chandak, chief executive and managing director of KEC International Ltd, an equipment manufacturer and turnkey contractor for the transmission and distribution sector, said, “PGCIL’s step is in the right direction, but it should go for JVs only where the products are proprietary in nature and can’t be easily outsourced.
Makarand.g@livemint.com