Mumbai: The power transmission company owned by the Union government, Power Grid Corporation of India Ltd (PGCIL), will raise up to Rs2,984 crore in an initial public offering (IPO) of 573.9 million shares. The offer, set to open on 10 September and close on 13 September, will be priced between Rs44 and Rs52 per share.
Two other Union government-owned power firms Rural Electrification Corp. (REC) and National Hydroelectric Power Corp., are also expected to enter the capital markets this year. REC has already made a filing with the market regulator for an issue of Rs1,200 crore. Earlier this year, Power Finance Corp. had raised nearly Rs1,000 crore from the stock market. After Delhi-based real estate firm DLF Ltd’s Rs9,162 crore issue and ICICI Bank’s Rs9,000 crore issue, PGCIL’s is the third largest public issue to hit the market.
The issue includes a fresh offer of up to 382.6 million shares or 10% fresh equity and 5% stake sale of 191.3 million shares by the government. The Union government’s stake in the company will fall to 86.36% from 100% after the issue. The company will retain Rs1,683-1,989 crore from the proceeds, while the government will get Rs841-994 crore.
Power Grid plans to use the money to fund 15 transmission projects worth Rs1,270.75 crore. It has already spent around Rs5,862.8 crore on these projects. Around 90% of its issue proceeds are likely to be used to finance the projects, according to J. Sridharan, director finance, PGCIL. The company also has an unutilized foreign currency debt pipeline of Rs2,358 crore, some of which will be used to finance other projects during the 11th Plan (2007-12), Sridharan added. PGCIL currently owns and operates 61,875km of transmission lines and transmits around 45% of the power generated in the country.
PGCIL is the third central power utility to tap the capital market for raising funds after NTPC Ltd in 2004 and Power Finance Corp. The transmission sector requires an estimated investment of Rs70,000 crore during the 11th Plan.
Speaking at the press conference where the issue was announced, Union power secretary Anil Razdan said that the power ministry is initiating several monitoring mechanisms to ensure that its 11th plan targets for generation and transmission capacities are met. These include the National Power Management Board to oversee the implementation of capacity addition plans of state-owned power firms. The board will monitor online the progress of the projects and keep tabs on equipment manufacturers and suppliers, as also other stakeholders to ensure that projects are on track. The board will also monitor the progress of the ultra mega power projects, Razdan said.
Razdan added that a group of union and state ministers headed by Union power minister Sushil Kumar Shinde has also been set up to monitor progress of these projects.
India’s state-owned power companies fell short of targeted capacities in power generation and transmission in the 10th Plan. Against a target of 41,000MW additional generation capacity, they added only 18,000MW, a shortfall of 53%. And against a targetted transmission capacity of 17,800MW, they added only 1,150MW. The 11th Plan has targeted a capacity addition of 78,577MW in generation and 37,500MW in transmission.
Reuters contributed to this story.