New Delhi: The World Bank will help PowerGrid Corp. of India Ltd, or PGCIL, bag projects in Africa, as the state-owned power transmission utility plans to expand its presence overseas.
“We will help PowerGrid access the African markets. We have been present in most African countries through projects funded by us. We are already working with PGCIL for a power transmission project in Afghanistan that will evacuate power from Central Asian countries to Afghanistan,” said Salman Zaheer, sector manager (energy) for the South Asia region at the World Bank.
The company’s Africa plans are part of a larger strategy to diversify into other countries by operating networks in them. Though PGCIL has been eyeing the global market in a big way, it has not been able to make much headway. It has its overseas operations planned across Dubai, Nigeria, Afghanistan, Bhutan, Myanmar, Nepal and Sri Lanka.
Overseas hopes: PGCIL chairman and managing director R.P. Singh says that with the World Bank already very active in African countries, its recommendation could help the firm acquire a global footprint. (Ramesh Pathania / Mint).
R.P. Singh, chairman and managing director at PGCIL, said: “We have a very long association with the World Bank, starting from the days of our inception when it had funded us. We plan to leverage this association and are focusing on Uganda, Tanzania and Nigeria. Since they (the World Bank) are already very active in African countries, their recommendations will immensely benefit us in acquiring a global footprint. A lot of projects will be offered there shortly. They had even helped us in the Nigerian consultancy project.”
PGCIL’s big play in the overseas market was linked to its plans to acquire the Philippines’ power transmission network—the National Transmission Corp. (TransCo)—in association with a local company. The company later abandoned this plan as one of its financial partners dropped out; the project was later awarded to a Chinese consortium.
The World Bank has been associated with the Indian power industry for a long time. In one of its recent initiatives, it agreed to offer a $600 million loan to PGCIL.
Over the last decade, the World Bank has provided support in India to Union government entities for generation, transmission and renewable investments, and to select state electricity boards for investments associated with sectoral reform. It is also working on a project to improve the efficiency of existing coal-fired power plants.
It is also involved with the Indian Renewable Energy Development Agency and has given it loans and also financed small renewable energy projects of the agency.
“PGCIL has been active in Africa and there are some aspects where the World Bank can greatly help, such as country risk mitigation. The bank can provide political risk guarantees through the Multilateral Investment Guarantee Agency. This makes a lot of sense as it makes investments possible in difficult areas,” said Anish De, chief executive officer at Mercados Asia, an energy consulting firm.
PGCIL currently owns and operates 67,000km of transmission lines and transmits around 45% of the power generated in the country through its network.
It closed 2007-08 with revenues of Rs4,700 crore and a net profit of Rs1,420 crore. It has a capital expenditure plan of Rs55,000 crore, of which it has already invested Rs6,615 crore during 2007-08.