Active Stocks
Fri Dec 01 2023 15:59:55
  1. Tata Steel share price
  2. 129.95 1.56%
  1. Reliance Industries share price
  2. 2,393.45 0.72%
  1. NTPC share price
  2. 269.05 2.97%
  1. ICICI Bank share price
  2. 946.35 1.19%
  1. HDFC Bank share price
  2. 1,555.5 -0.22%
Business News/ Industry / Energy/  Power transmission companies look for projects outside country
Back Back

Power transmission companies look for projects outside country

Slow demand is making them eye opportunities in other sectors and foreign markets

Slow growth in power demand has reduced the immediate need for new transmission capacity (Bloomberg)Premium
Slow growth in power demand has reduced the immediate need for new transmission capacity (Bloomberg)

With new power transmission projects thin on the ground, leading transmission companies are looking elsewhere, such as Latin America, to try and bolster their order books.

Slow growth in power demand has reduced the immediate need for new transmission capacity, prompting some firms to turn to new opportunities in sectors such as metro rail and urban infrastructure as well as foreign markets.

“Order intake this year has been lukewarm because of Covid-19, flat growth in power demand," Vimal Kejriwal, managing director (MD) and CEO, KEC International Ltd, one of the largest engineering companies in the transmission business, told Mint. “The changing norms in performance guarantees and local sourcing tenders have caused disturbances in the tendering processes. For instance, most power substations now are built with gas-insulated switch gears which are more efficient. But these are mostly sourced from China and South Korea. But tenders have not been clear on how to source this, so tenders have been postponed. While the intention is good, this has slowed down the tendering process."

Transmission line addition was lower at 11,921 circuit kilometres (ckm) in April-October 2020 than last year’s 13,451ckm, according to the Central Electricity Authority. There is a pipeline of about 39,000 crore of new transmission projects but government tenders have been delayed because of new notifications from the ministry of power regarding local sourcing and equity lock-in periods.

Besides, some renewable energy developers have scrapped new projects, which means the transmission lines planned for power evacuation from these sites have been delayed as well.

In the first six months, KEC’s order book in the transmission and distribution segment shrank by 4% to 3,431 crore while its non-transmission and distribution (railways, civil, urban infra) segment grew 21% over the same period to 2,152 crore.

“We’ve seen a six-nine month lull during covid because transmission tenders cannot happen without site visits," said Pratik Agarwal, MD, Sterlite Power.

“We are not worried because we have a strong order book for 24-30 months and a large order book in Brazil, and seeing a lot of deal activity there. We are seeing transmission under the greenfield concessions route coming up in the rest of Latin America, in Chile, Peru and Panama, and early stages of this in east Africa. At Sterlite, we are global and we will look at these markets when they become live."

Bidding in power transmission projects has been subdued this year and that is a concern; there are more assets changing hands than new projects being built, said Ankur Agarwal, associate director, India Ratings.

However, Anil Sardana, MD and CEO, Adani Transmission, believes the pace at which new projects will be awarded will speed up. “Yes, there is visible postponement in taking forward the bidding of transmission projects due to covid-19 but the requirement of these transmission systems is intact," he said.

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Catch all the Elections News, Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Updated: 09 Dec 2020, 04:49 PM IST
Next Story footLogo
Recommended For You
Energy Stocks
Switch to the Mint app for fast and personalized news - Get App