Power Grid Corp. of India Ltd (PGCIL), the state-owned power transmission utility, plans to acquire the Philippines’ power transmission network in association with a local company as part of a larger strategy to diversify into other countries by operating networks in them. The National Transmission Corp. (TransCo) of Philippines is valued at $3.3 billion.
“We have put in an expression of interest for the entire power transmission network of Philippines,” said R.P. Singh, chairman and managing director, Power Grid Corp. The company will be a 40% partner in the consortium with a local company accounting for the rest. Philippines law does not allow a 100% foreign direct investment in a transmission network.
Power Grid Corp. is currently in the process of identifying its partner. The company, which will provide its technical expertise to run the Philippines grid, expects the acquisition to increase its international profile and help its cause as it bids for networks in other countries.
TransCo is owned and managed by the government and supplies power to the country’s 123 distribution utilities and electric cooperatives that in turn deliver electricity to end-users. The Philippines government plans to privatize all transmission utilities in the country as part of an effort to increase efficiency in the business and improve service to customers. The Power Sector Assets and Liabilities Management Corp. will manage the sale of these transmission assets. TransCo’s assets include around 21,319 circuit-km of transmission lines, including a submarine cable system, and 93 substations.
A Power Grid Corp. executive, who did not wish to be identified, said the company was looking at similar opportunities in “Africa and Asia”.
“Such an acquisition could provide it (Power Grid) scale (of operations) and help it bid for other projects overseas,” said Abhishek Puri, an analyst with ASK Securities.
Power Grid Corp. currently owns and operates 61,875km of transmission lines and transmits around 45% of the power generated in the country. It closed 2006-07 with revenues of Rs4,082 crore and a net profit of Rs1,088 crore.
Power Grid Corp. also plans to raise up to Rs2,984 crore in an initial public offering of 573.9 million shares. The issue includes a fresh offer of up to 382.6 million shares or 10% fresh equity and the sale of 191.3 million shares, amounting to 5% of equity, by the government.
Several Indian state-owned firms that operate in the energy sector have global ambitions. Oil and gas explorer and producer Oil and Natural Gas Corp. Ltd has investments in 26 oil 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 plans to build power plants in Nigeria.