New Delhi: In a bid to tap opportunities outside India, the state-owned Power Grid Corp. of India Ltd (PGCIL) plans to set up a subsidiary along the lines of ONGC Videsh Ltd, the overseas arm of oil and gas explorer and producer Oil and Natural Gas Corp. Ltd (ONGC).
“We have already formed an international business development wing headed by an executive director, and have plans to set up an office in West Asia to start with,” said a top PGCIL executive, who did not want to be identified. The executive added that the move was a precursor to forming an overseas arm that would eventually be spun off as a subsidiary.
PGCIL has had global aspirations for some time, but hasn’t been able to make much headway. “This will be a new approach to our overseas expansion after we failed in our earlier overseas endeavours,” the executive said, referring to the company’s failure in acquiring the Philippines’ power transmission network National Transmission Corp.
The company abandoned that plan after one of its financial partners dropped out. The project was later awarded to a Chinese consortium.
Several state-owned Indian companies that operate in the energy sector have global ambitions. ONGC has investments in 26 hydrocarbon blocks across 15 countries. Coal India Ltd’s international arm, Coal Videsh Ltd, plans to acquire coal blocks in Mozambique and India’s largest power generating company, NTPC Ltd, hopes to build power plants in Nigeria.
PGCIL’s overseas plans are part of the company’s larger strategy of establishing a presence in other countries by operating networks in them. It is looking at entering Africa, Central Asia, West Asia and India’s immediate neighbours in the subcontinent; the company is actively pursuing projects in Uganda, Tanzania, Nigeria, Kazakhstan, Tajikistan, Nepal, Bhutan, Sri Lanka and Myanmar for engineering and consulting. It also plans to leverage its association with the World Bank to expand its presence overseas, as reported by Mint on 8 May.
An equity analyst, however, wasn’t impressed with PGCIL’s global ambitions at a time when it is missing its domestic targets.
Madanagopal R., an equity research analyst at Centrum Broking Pvt. Ltd, said: “PGCIL will find it very difficult to achieve the 11th Plan targets... PGCIL will be better off to focus on achieving the Plan targets first.” India’s policy planning for government arms and companies is done once in five years and these plans are called five-year plans. The current Plan, the 11th in a series, runs up to 2012.
PGCIL owns and operates 69,500km of transmission lines and transmits around 45% of the power generated in the country through its network. It closed 2007-08 with a revenue of Rs4,700 crore and a net profit of Rs1,420 crore. It has a capital expenditure plan of Rs55,000 crore during the 11th Plan, of which it has already invested Rs6,615 crore in 2007-08.