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Power Grid plans to enter gePower Grid plans to enter generation business overseas

As part of its diversification plans, state-run power transmission utility Power Grid Corp. of India Ltd (PGCIL) plans to enter the power generation sector overseas. “In India, we can’t get into power generation. We should get into other geographies for the company’s growth. We plan to enter power generation in other countries and are putting our people on work on this,” said a top PGCIL executive requesting anonymity. Under the existing law, PGCIL is the only central transmission utility that can undertake transmission of electricity in India, but it can’t enter the power generation business. The Electricity Act, 2003, states: “The central government may notify any government company as the central transmission utility, provided that the central transmission utility shall not engage in the business of generation of electricity or trading in electricity.”

“We have restrictions in India to enter the power generation business, but overseas we can enter the sector,” said another PGCIL executive aware of the company’s strategy, who didn’t want to be identified. Mint reported on Wednesday about PGCIL’s plans to enter the domestic power transmission business in Bangladesh and Sri Lanka by setting up companies there. The transmission utility operates 86,000-circuit km of transmission lines, and wheels 50% of the power generated in India.

“NTPC (Ltd) and PGCIL were all together at one point of time. Their lineage is common. However, this diversification should be based on some strategy,” said Shubhranshu Patnaik, senior director (energy and resources) at audit and consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd. In another development, as part of India’s overall strategy to strengthen relationships with African countries, PGCIL is planning a big push in Africa, ranging from opportunities in acquiring assets in Nigeria, Kenya and Ethiopia to setting up transmission projects through the public-private partnership (PPP) route. It also plans to construct the Ethiopia-Kenya electricity interconnection that would bring 900 megawatts (MW) of power to Nairobi.

As part of its consultancy assignments, PGCIL is already involved in institutional development in Kenya by training the transmission system engineers of Kenya Electricity Transmission Co. Ltd (Ketraco) and is conducting a review of technical specifications of Nigeria’s transmission system. It also plans to bid for a consultancy assignment in Ethiopia for conducting a feasibility study of its transmission system. “We are currently involved in the process of relationship building in these three countries. After that we plan to acquire assets. We have signed a MoU (memorandum of understanding) with Ketraco. Twenty of their engineers have come here for training and, going forward, more will be trained. Ethiopia has invited expressions of interest for the feasibility study and a pre-bid conference has been called on 18 October. We will be bidding for it and a team will be going there,” said the top PGCIL executive quoted above. Despite being rich in energy resources, Africa suffers from a chronic power shortage.

“We had earlier also written to the Kenyan government for setting up the Ethiopia-Kenya interconnection project through the PPP route,” said another PGCIL executive, who also didn’t want to be named. PGCIL’s Africa plans are part of the company’s strategy to expand overseas operations, as the proposed separation of key power management functions will leave it with just the task of setting up transmission links. A senior power ministry official confirmed PGCIL’s plans. Paul G. Ngatia, senior deputy secretary in Kenya’s ministry of energy, said: “There is a need for construction of transmission lines in Kenya. Only 20% of our people have access to electricity. While today we generate 1,400MW, we will be requiring 5,000MW within the next 10 years. The feasibility report for the 1,400km Ethiopia-Kenya interlink is ready and we will be shortly floating a tender for the same.”