• In a path breaking reform, cabinet has approved monetisation of assets of POWERGRID, a  Public Sector Undertaking (PSU) under Ministry of Power, through Infrastructure Investment Trust (InvIT) model.

    • This is the first time any PSU in Power Sector will undertake asset recycling by monetising its assets through the InvIT model and using the proceeds to fund the new and under-construction capital projects.

    • This approval would help POWERGRID to monetise in the first lot, assets with gross block value of more than 7000 crore. 

    • These assets, which are mainly High Voltage Transmission lines and substations, are held by POWERGRID in form of Special Purpose Vehicles (SPVs).

    • The proceeds from the asset monetization would be deployed by POWERGRID in their new and under-construction projects.

    • Asset recycling is a key strategy of the Government of India to release the capital invested in operational assets and the proposed InvIT of POWERGRID would attract both domestic as well as global investors including Sovereign Wealth Funds.

    • Sale of assets to InvITs is a way of accessing long term, relatively cheap finance required to fund infrastructure projects in Transmission Sector.

    • The CAPEX plan of POWERGRID for next two years (2020-21 and 2021-22) is Rs. 20,500 cr.

About POWERGRID

    • Power Grid Corporation of India Limited (POWERGRID), is an Indian state-owned electric utility company headquartered in Gurugram, India. 

    • It started its commercial operation in the year 1992-93 and is today, a Maharatna company, engaged in the business of power transmission.

    • The Company, along with its wholly owned subsidiaries acquired through the Tariff Based Competitive Bidding (TBCB) process,owns and operates a pan India transmission network.

    • It transmits about 50% of the total power generated in India on its transmission network.

    • The Company meets its fund requirement for its Capital Expenditure (CAPEX) through its internal accruals and debt.

    • Few statistics are:

        ◦ 164,511 ckm Transmission Lines

        ◦ 249 Sub-Stations >99 % System Availability

        ◦ 414,774 MVA Transformation Capacity

        ◦ Owns and operates approx 66,922 km of Telecom Network

Objectives

    • Undertake transmission of electric power through Inter-State Transmission System.

    • Discharge all functions of planning and coordination relating to Inter-State Transmission System with-

        ◦ State Transmission Utilities

        ◦ Central Government

        ◦ State Government

        ◦ Generating Companies

        ◦ Regional Power Committees

        ◦ Authority

        ◦ Licensees

        ◦ Any other person notified by the Central Government in this behalf.

    • To ensure development of an efficient, coordinated and economical system of inter-state transmission lines for smooth flow of electricity from generating stations to the load centres.

    • Efficient Operation and Maintenance of Transmission Systems.

    • Restoring power in quickest possible time in the event of any natural disasters like super-cyclone, flood etc. through deployment of Emergency Restoration Systems.

    • Provide consultancy services at national and international levels in transmission sector based on the in-house expertise developed by the organization.

    • Participate in long distance Trunk Telecommunication business ventures.

    • Ensure principles of Reliability, Security and Economy matched with the rising / desirable expectation of a cleaner, safer, healthier Environment of people, both affected and benefited by its activities.

About Infrastructure Investment Trust (InvIT)

    • An Infrastructure Investment Trust (InvITs) is like a mutual fund, which enables direct investment of small amounts of money from possible individual/institutional investors in infrastructure to earn a small portion of the income as return.

    • InvITS are like mutual funds in structure and consists of four elements: 1) Trustee, 2) Sponsor(s), 3) Investment Manager and 4) Project Manager.

    • It was launched as part of the brown field asset monetization strategy for augmenting infrastructure investment.

    • InvIT would provide an opportunity to the general public and institutional investors such as Pension Funds, Mutual Funds, to benefit from this investment opportunity and participate in the growth of Indian Infrastructure Sector.

    • The Government of India has enacted an enabling regulatory and taxation framework for InvITs

(The author is a trainer for Civil Services aspirants. The views expressed here are personal.)