New Delhi: Power Grid Corp. of India Ltd (PGCIL), India’s leading power transmission company, plans to raise around Rs3,000 crore through a public offering.
The money will go to the company and not to a special investment fund set up by the government in 2007 to receive money raised through disinvestments in public sector companies.
Three-fourths of the interest earned on money in the National Investment Fund (NIF) has to be used to finance select social sector schemes, while the rest is to fund the capital requirements of public sector undertakings that are either profitable or turnaround candidates.
This is because PGCIL will be going in for a follow-on public offering (FPO).
“We plan to come up with an FPO by the end of this financial year. If that is not possible, then by early next financial year,” said a top PGCIL executive, who did not want to be identified.
The Union government had earlier divested its 5% stake in PGCIL, piggybacking on a similar fresh equity offering by the company.
Through the sale of 382 million shares to the public in September 2007, PGCIL raised Rs2,984 crore.
Of this, Rs1,989 crore accrued to the company, with the balance Rs995 crore going to NIF. After the share sale, the government has a 86.36% stake in the company.
“We will be offering 13.5% of equity in the FPO. This will be (a) fresh issue of shares and not divestment,” another PGCIL official, who also did not want to be identified, added.
Unlike PGCIL’s first public issue in 2007, the government will not sell part of its shareholding. Therefore, the proceeds of the entire FPO will accrue to PGCIL. However, the expansion in the company’s equity will automatically dilute the government’s shareholding, bringing it down to 76.35% of the expanded equity.
“PGCIL has a large expansion plan. With the proposed national grid requiring a lot of money, this equity will easily help in raising a debt of around Rs9,000 crore,” said Anish De, chief executive of Mercados EMI Asia, an energy consulting firm.
The government proposes to spend Rs1.4 trillion to build a national power transmission grid that will more than double the transmission capacity in the country to 38,650MW by 2012 from the current 19,750MW. Of this, Rs75,000 crore is needed for regional and national grids.
PGCIL owns and operates 70,100 circuit km of transmission lines and transmits around 45% of the power generated in India. It envisaged a capital expenditure plan of Rs55,000 crore during the 11th Plan (2007-12) and plans to operate networks in countries in Africa, Central Asia and West Asia.