PowerGrid to partner West Asian firms to bid for overseas contracts

PowerGrid to partner West Asian firms to bid for overseas contracts

New Delhi: State-owned electricity transmission company Power Grid Corp. of India Ltd (PGCIL) will jointly bid for contracts in West Asia and North Africa along with Qatar’s Venture Gulf Group (VGG) and Kuwait’s Real Estate Construction and Fabrication Co. (Recafco).

A PGCIL delegation will be leaving for West Asia shortly to sign memoranda of understanding, or in-principle agreements, with the two firms, which are engaged in civil engineering and construction, on 7 October and 8 October respectively.

S.K. Chaturvedi, chairman and managing director of PGCIL, confirmed the development.

“We will be signing the MoUs shortly and will quote (bid) together in those geographies," he said. “In order to get projects in those economies, having a local partner is a must. We will execute the contracts on a partnership basis for which the percentage share will be decided later. PGCIL will provide supervision, engineering support and technology and project management skills for the contracts."

Questions emailed to VGG and Recafco on Friday remained unanswered at press time on Sunday.

PGCIL’s plans are part of a larger strategy aimed at establishing its foreign presence. It has had global aspirations for some time, but hasn’t been able to make much headway and is looking at entering Africa, Central Asia and West Asia.

The company is also pursuing projects in Uganda, Tanzania, Nigeria, Kazakhstan, Tajikistan, Nepal, Bhutan, Sri Lanka and Myanmar for engineering and consulting contracts.

PGCIL is also looking aggressively to expand its overseas footprint as the planned separation of key power management functions will leave it with only the task of setting up transmission links.

“We are also willing to take equity stake in projects, where it involves setting up a transmission link and maintaining it. We are open to all options across concept to commissioning contracts," said another senior PGCIL executive, who did not wish to be identified.

PGCIL posted a net profit of Rs1,691 crore on revenue of Rs7,029 crore in 2008-09. Of this, consultancy accounted for around Rs125 crore. The state-owned company has set for itself a target of achieving 5% of revenue through consultancy work.

“Qatar is an extremely progressive country, which has seen the successful completion of several dynamic projects, particularly in the past decade and a half since its economy opened up. Similarly, Kuwait too, though on a different scale and complexion vis a vis Qatar, has been open to attractive forward-looking business ventures," said Monish Chatrath, executive director at consultancy Mazars India.

The two nations “provide attractive business opportunities, despite the current relatively depressed global business environment. The laws in these countries require a certain degree of involvement of locals, who can and generally do, play an active support role in establishing and conducting businesses with overseas partners in these countries," Chatrath said.

PGCIL also plans to set up a subsidiary along the lines of ONGC Videsh Ltd, the overseas arm of oil and gas explorer and producer Oil and Natural Gas Corp. Ltd, as reported by Mint on 9 February.

PGCIL operates around 71,500 circuit km of transmission lines and 120 substations. While India has an inter-regional power transfer capacity of 20,800MW, PGCIL plans to increase it to 37,000MW by 2012. The public sector unit has a capital expenditure plan of Rs55,000 crore for the 11th Plan (2007-12). Of this, Rs16,500 crore has already been spent.