PowerGrid eyes joint ventures in Bangladesh, Sri Lanka

PowerGrid eyes joint ventures in Bangladesh, Sri Lanka

New Delhi: State-run Power Grid Corporation of India Ltd (PGCIL) plans to enter the power transmission business in Bangladesh and Sri Lanka by setting up joint ventures with local partners.

The Indian power transmission company is already setting up an interlink between India and Bangladesh and is in talks to execute a similar project with Sri Lanka. It now wants to enter their domestic markets to boost growth.

“We have proposed to the Indian government that we plan to set up companies in Bangladesh and Sri Lanka for power evacuation within their domestic markets," a PGCIL executive said on condition of anonymity. “We have requested the government to take up the issue with the respective governments."

The company wants to enter these markets through the public-private partnership route and set up joint ventures (JVs), said another PGCIL executive who did not want to be identified.

“In the JVs, PGCIL will take a stake and will put in some equity. Since, PGCIL will be the executing agency for the projects it will be easier for the JV to raise loans," this executive said.

Bangladesh has an installed capacity of 10,000megawatts (MW) and Sri Lanka 2,500MW, compared with India’s 181,000MW. PGCIL is setting up a 250MW grid interconnection for power transmission between India and Bangladesh. It is also in talks to set up a link for 1,000MW between India and Sri Lanka, of which 30km will be under the sea.

Such transmission links will help create an electricity grid of the South Asian Association for Regional Cooperation (Saarc), a bloc that also includes Afghanistan, Bhutan, the Maldives, Nepal and Pakistan. The grid will make it easier for the region to meet electricity demand and boost regional economic and political cooperation.

“Sri Lankan and Indian officials are meeting on 7 November to discuss the transmission interlink," said Mahishini Colonne, Sri Lanka’s deputy high commissioner to India.

Colonne said she was not aware of PGCIL’s plans to set up domestic transmission business in her country.

Enamul Hoque Chowdhry, minister, press, at the Bangladesh high commission in New Delhi didn’t respond to phone calls and a message left on his mobile phone.

“In India, the market is regulated and there is only so much return that we can get," the first PGCIL executive said, explaining why the company wants to explore markets abroad. “We should get into other geographies for the company’s growth."

PGCIL gets a guaranteed rate of return on equity of 15.5% in the Indian market.

“Whether you can do business in other country is dependent upon the laws of that particular country," said an Indian power ministry official, asking not to be identified.

An external affairs ministry spokesperson did not respond to request for comments.

Shubhranshu Patnaik, senior director, energy and resources at Deloitte Touche Tohmatsu India Pvt. Ltd, said PGCIL has a good chance of entering the two neighbours’ domestic transmission markets.

“The transmission business is government-held in both Bangladesh and Sri Lanka. If PGCIL can make a pitch at the government level, such a move is possible because both countries are inclined towards India," Patnaik said.

PGCIL registered a net profit of 2,697 crore over a revenue of 9,100 crore in fiscal 2010-11. The transmission utility operates 86,000 circuit km of transmission lines, wheeling 50% of the power generated in India.

As part of India’s efforts to improve ties with Bangladesh, state-run NTPC Ltd plans to set up two imported coal-based power projects totalling 3,960MW in that country through an equal joint venture with the Bangladesh Power Development Board.

India’s largest power generation utility has also signed a JV agreement with Sri Lanka’s Ceylon Electricity Board for developing its first overseas project, a 500MW plant.