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After Power Grid, state transcos to monetise assets

01 Oct , 2022   By : Monika Singh

After Power Grid, state transcos to monetise assets

After the success of monetisation of Power Grid Corporation of India’s transmission assets, the Centre is working on a public-private-partnership model for monetisation of transmission lines owned by state government firms to unlock their value and generate resources that can be re-invested in strengthening the infrastructure.

While Power Grid has opted for Infrastructure Investment Trusts (InvITs), a model akin to the toll-operate-transfer (TOT) model being used for highway assets may be employed for state transcos’ asset monetisation. This is in view of the fact that individual sizes of the assets on offer are comparatively smaller, an official said.

The TOT model focuses on income-yielding assets with established cash flows; there will be no transfer of ownership of assets from the authority to the concessionaire. While the state transcos will get upfront payment for the assets, the concessionaire retains the revenues and is responsible for undertaking O&M obligations only.

“The guidelines being readied by the ministry of power will detail steps to be taken by the states for monetization of their transco businesses. States like Uttar Pradesh, Gujarat, Karnataka, Odisha and other major states are keen on doing this,” the official said. The official said the guidelines on this will be out soon.

There are three major pillars of the power sector i.e. generation, transmission, and distribution. For transmission within the states, most states have a separate state transmission utility created at the time of unbundling. However, some states’ power departments still operate all three pillars of the power sector.

Net worth for the states’ transmission utilities stood at Rs 87,828 crore and equity was Rs 63,005 crore as on March 31, 2020, as compared to the net worth of Rs 82,026 crore and equity of Rs 59,789 crore as on March 31, 2019.

Transmission utilities together reported a profit of Rs 2,134 crore during the year 2019-20. The Karnataka Power Transmission Corporation, Transmission Corporation of Telangana, West Bengal State Electricity Transmission Company, The Gujarat Energy Transmission Corporation and Bihar State Power Holding Company have been among the top profit earners in transmission utilities during the year.

Total borrowings by transmission utilities stood at Rs 1,18,186 crore as on March 31, 2020.

Power Grid is the central transmission utility of the country with a mandate for providing transmission system for evacuation of central sector power. Through InvITs, it mobilised about Rs 7,700 crore by monetizing transmission lines in FY22 and will likely raise a similar amount in FY23 as well.

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