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1

Presentation

to

Joint Secretary,

Minister of Power

June,27, 2003

New Delhi

Power Grid Corporation of India Ltd.


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OBJECTIVES OF POWERGRID

The Corporation has set following objectives in line with itsMission and its status as Central Transmission Utility:

- Undertake transmission of energy through Inter-State

transmission system.

- Discharge all functions of planning and coordinationrelating to Inter-State transmission system

- Exercise supervision and control over the Inter-State


- Efficient Operation and Maintenance of Transmission

systems.

- Establish / augment and operate all Regional Load Despatch

Centres and Communication facilities.

Contd/-


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- To facilitate private sector participation in transmission systemthrough Independent Private Transmission Company / Joint

Ventures.

- To assist various SEBs and other utilities in upgradation of

skills & sharing of expertise by organising regular conferences,

tailor-made training workshops directed towards specific

technological and O&M areas and extending laboratory

facilities for testing purposes etc.

- Restoring power in quickest possible time in the event of any

natural disasters like super cyclone, flood etc. through

deployment of Emergency Restoration Systems.

- To provide consultancy services at national and international

level in transmission sector based on the inhouse expertise

developed by the organisation.

- To participate in long distance trunk telecommunication

business ventures.

OBJECTIVES OF POWERGRIDContd/-


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ORGANISATIONAL

STRUCTURE OF POWERGRID

Corporate Centre

RHQ (7 No.)

Lines/ Sub-Stations

NLDC

RLDC(5 No.)

SLDC

RTU


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Incorporated in October, 1989.

Commenced commercial operation from

April 1, 1992.

Notified as Central Transmission Utility in Dec 98.

One of the largest and best managed transmission

utility in the World with EHV network of over

46,000 ckm, wheeling more than 200 billion units

(worth Rs. 40,000 Crore) per year - 40% of totalgenerated power in the country.

Sustained high system availability - about 99%.

Consistently profit making.

POWERGRIDToday


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6

POWERGRIDToday Rated EXCELLENT against MOU with MOP since

1993-94. Received The Prime Ministers MOU Award consecutively

for 3 years since 1998-99.

First ISO 9001 company in Indian Power Sector.

Rated at the highest bracket by domestic credit ratingagencies.

During the FY 2002-2003, POWERGRID

commissioned projects worth Rs 5,300 Crore. These

projects were completed at a cost lesser by Rs 820Crore than the GoI approved cost and ahead of

schedule.


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1992-93 2002-03 Growth(%)Physical Performance

No. of Sub-stations 39 79 102

MVA capacity 13,200 44,836 240

Circuit kms 23,000 46,245 101

Inter-regional transfer 500 8,000 1500capacity (MW)

Financial Performance (Rs Cr.)

Net profit 236 650 175

Turnover 634 2,419 282

No. of employees 5,725 6,339* 11

* Excluding 586 employees transferred from CEA (with RLDCs) and

from NTPC (with HVDC)

POWERGRIDGrowth Profile


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The Electricity Laws (Amendment) Act, 1998

provided for:

Transmission as a distinct activity.

A new concept of Central Transmission

Utility (CTU) at the National level / StateTransmission Utilities (STUs) at the State

level for ensuring centralized planning, co-

ordination and control.

CTU / STUs kept under Govt. ownership.Granted ApexBody status to RLDCs.


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RLDCs/SLDCs to be operated by CTU/STUs

respectively, unless specified otherwise by

Central Government.

CTU/STUs to be actively involved in private

investment in transmission.Appropriate Commissions to issue the

Transmission License to private parties upon the

approval by CTU/STUs.

Govt. used to give directions to POWERGRID toestablish, operate & maintain Transmission

System under Section 18A of 1948 Act.


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Separate Companies for NLDC, RLDCs andSLDCs.

Roles, responsibilities and functions of RLDCs /

RPCs.

Responsibility of short term planning oftransmission system.

Functions of CTU and its privatisation.

Role of CTU in Private Investment in

transmission. Usage of transmission assets for telecom

purposes.

Open access to transmission system


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The Act, under clauses 26(3), 27(2) and31(2), envisages formation of separateGovernment companies for the operationof NLDC, RLDCs and SLDCs.

In line with the worldwide trends, the maintransmission agency should beresponsible for system operation

functions on permanent basis, i.e., CTUshall operate NLDC and RLDCs, whileSTUs shall operate respective SLDCs, inline with the current practice.


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The Act under clause 2(55) and clause 28(1)

defines the roles of REBs/RPCs as a facilitator forintegrated operation of power system, and that ofRLDCs as an agency responsible for integratedoperation of power system in that region. The Act

has only changed the name of the body i.e. fromREB to RPC.

Roles and responsibilities of RLDCs / RPCs need

to be clearly demarcated by specifying theirrespective functions.


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As per the Act under clause 73(a), CEA has been

mandated to formulate short term & perspectiveplan for power development in the country.

In line with the statutory function of CTU for

planning and coordination, the short term

planning of inter-state transmission system

should have been entirely left to CTU under the

overall long term Electricity Plan developed by

CEA.


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The Act under clause 38(1) provide for a

Government Company to be CTU. However, theAct under third para of clause 38(1), providesfurther that the Central Government maytransfer, and vest any property, etc., of CTU, toa company or companies to be incorporatedunder the Companies Act, 1956 to function as atransmission licensee, through a transferscheme.

This provision militates against the veryconcept of having a Government-owned CTU.


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The 1910 Act under clause 27C(2) provides for

licensee to work under direction, supervision

and control of CTU.

The 2003 Act under clauses 12 & 14 has placedCTU at par with other Transmission Licensees.

CTU, being a statutory authority, should not

be referred to as a Transmission Licensee. Itsrole should have remained as envisaged in the

earlier Acts.


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The 1910 Act under clause 27C(4) states that nolicense application shall be entertained by CERC

unless the applicant has obtained the approval of CTU.The 2003 Act under clause 15(3) states that any personcan apply directly to CERC for the License, with a copyto CTU for recommendations. However, suchrecommendations of CTU shall not be binding onCERC.

CTU, being a statutory authority, no application for alicense should be entertained by CERC, unless thesame is approved by CTU, in line with the existingprovisions.


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The Act under clause 41 empowers CERC tolook into the question of using transmission

assets for any other purposes where as the

existing Acts are silent on this issue.

Duties of generating companies include

dedicated transmission lines also. Captive

generating plants may also set up dedicated

transmission lines.

Directions corresponding to 18A of 1948 Act

needed.


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CTU & RLDC not to engage in generation and

trading of electricity.

CTU to provide non-discriminatory open access

to its transmission system for use by anylicensee, generating company or consumer

(clause 38-2-d).

Guidelines for determining tariff through aprocess of bidding shall be issued by the

Central Government (clause 63).


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Undertake transmission of electricity through

inter- state transmission system.

Discharge all functions of planning and co-

ordination relating to inter state transmission

system.Ensure development of an efficient,

coordinated & economical inter state


Provide non-discriminatory open access to its

transmission system


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POWERGRID was anyway performing

almost all the functions, which the earlieramended statute & the Electricity Act 2003bestowed upon the CTU. NotifyingPOWERGRID as CTU is thus a natural and

logical step.Objectives of POWERGRID and the

Statutory Role and Responsibilities of CTUgo hand in hand and they are so much inter-

mingled that they can not be separated.


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ACTION PLAN FOR 2003-04

(In Rs. Crores)

Budget Estimate (2003 - 04) : 2750

Scheme-wise break-up: BE(2003-04)

Ongoing Schemes - 2028.73

New Schemes - 563.74

Completed Schemes - 13.88

Telecom - 143.65---------

TOTAL : 2750

Utilisation of Budget under the new schemes (Rs. 563.74Crore) would largely depend on availability of investmentapproval of major projects like Sipat-I, Sipat-II, and TalaTransmission projects (about Rs. 343 Crore) - GoIsapproval is awaited.


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Funding Plan for BE 2003-04

Internal Resources 578

Development Surcharge 250

Bonds/Domestic Loans 1127

Foreign Borrowings 715

IEBR 2670Net Budgetary Support 80

Total 2750


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Action Plan for

next 10 years

24

P Pl


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24

POWERGRIDPerspective Plan Addition of 60,000 ckm of Transmission Network

with an investment of Rs. 71,000 crores toevacuate additional 1,00,000 MW by 2011-12

Mobilising adequate financial resources (includingprivate participation) for the implementation of the

plan, while maintaining sound financial health ofthe company POWERGRIDs own investment Rs. 50,000 Crore and

balance Rs. 21,000 Crore from Private Sector

Creation of National Grid and enhancing inter-regional transfer capacity from the existing levelof 8,000 MW to 30,000 MW by 2012


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POWERGRIDPerspective PlanInvestment Program

X Plan XI Plan Total

Private Sectorparticipation

9,710 11,185 20,895

POWERGRIDsOutlay

21,370 28,258 49,628

Total Central Sector(Transmission + Telecom)

31,080 39,443 70,523

Rs/Crs.

P Pl


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POWERGRIDPerspective PlanEstimate of Funds to be Mobilised

A. Identified Funds : X Plan XI Plan Total

Internal Resources 2,938 5,081 8,019

Development Surcharge 1,216 1,867 3,083

Net Budgetary Support 1,000 0 1,000

Committed ECB 5,500 5,500

Domestic Fund tied up 810 810

Total (A) 11,464 6,948 18,412B. Funds to beMobilised:

9,906 21,310 31,216

Total(A+B) 21,370 28,258 49,628


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Investment andFundingStrategy

Future Funding Option Assumed

20%

10%

70%

Multilateral

Suppliers' Credit

Domestic


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Diversification

into

Telecom


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POWERGRID diversifying into Telecom to

utilize spare telecommunication capacity ofULDC schemes and maximize return on its

transmission infrastructure

Through an incremental investment

In a limited manner and without affecting the

core business

Foray into telecom recommended by reputed

international consultants viz. IVO Power

Engineering, Finland along with

PricewaterhouseCoopers, UK

POWERGRIDs DIVERSIFICATION INTO TELECOM


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POWERGRID has implemented /is implementingULDC projects for Real Time Power System

Management in all five Regions

Dedicated Telecom links under ULDCSchemes

Region Status/Completion OFC (Km)Northern Completed 830

Southern Completed 613

North Eastern Completed 961

Eastern By Mar 03 887

Western By Aug 03 1,431

NLDC By 2005 941

Total 5,663


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Fiber Optic Backbone Network of 14,000 Km,which will interconnect 60 major cities

OFC under ULDC/ LDC schemes 5,663 Km

Incremental Network required 8,437 KmTotalproject cost Rs. 934 cr.

Investment approval accorded by GoI in

March 2002Target Completion by 2004-05



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Obtained IP-II license in January 2001

Delhi-Mumbai Link was prioritised and

commissioned in a record time of 9

months

Links under commercial operation

Delhi-Chandigarh;

Delhi-Lucknow-Mumbai;

Delhi- Jaipur;


Facilitating Distribution Sector


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Facilitating Distribution SectorReforms (APDRP)

Appointed Advisor-cum-Consultant : 105 circles

Direct Advisor-cum-Consultant : 37 circles (15 States)Co-ordinator : 14circles in 5 States

(assigned to NPC, WAPCOS,ERDA).

54 circles (developed by SEBs)

Ist Phase is over and cumulative projects worthRs16,000 Crore already approved in the country.

Projects worth Rs 5587 Crore approved, where

POWERGRID was associated

In addition APDRP program undertaken on turnkey andbilateral basis in three States namely Assam, Goa,Bihar.


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Perspective Plan

- Development of

National Power Grid

Need of National Grid


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Need of National Grid

Uneven disposition of energy resources Major Hydro resources in NER & NR

Coal reserves mostly in Jharkhand / Orissa / West Bengal Cost of power transmission lower than cost of fuel transportation

Transmission is more environment friendly than load centre basedgeneration

Growth disparity

ER surplus (Load did not grow as expected) Other regions deficit (Demand outstripped Gen. Cap. addition)

Optimization of generation capacity addition Utilising time and seasonal diversity Spinning reserve optimisation Utilisation of operational surpluses

Flexibility of adding IPPs along the National Grid

Conservation of Right-of-Way -- especially in areas with scarcity ofROW viz. area near hydro projects, chicken - neck area, forest area,towns etc.

D l t f N ti l G id


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Development of National Grid :

Strategy Development in a phased manner commensurate with

generation / load growth. Flexible Plan to accommodate change in load-generation

pattern.

Detailed studies carried out in consultation with CEA to

evolve system elements Existing ER surplus and operational surpluses in the time

frame of 2006 - 07 are to be transmitted over National Grid

Uncertainty in generation capacity addition can be fine

tuned from time to time including impact of time & costoverruns, if any.

National Load Dispatch Center envisaged by 2005 - 06 for

coordinated operation of National Grid

P Pl


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POWERGRIDPerspective PlanNational Grid, Phase-I

Interconnection of Regional Grids through HVDC

Back-to-Back and AC links

to take care of widely varied operational

parametersDevelopment of phase-I of National Grid completed

when Sasaram HVDC B/B Link between ER and NR

was commissioned in Sept. 2002.

Cumulative Inter-Regional Transfer Capacity

estableshed at the end of Phase-I : 5,000 MW

O E G D P ti Pl


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POWERGRIDPerspective PlanNational Grid, Phase-II (by 2007)

Strategy: High capacity Inter-Regional Transmission Highways

envisaged along with major generation projects Hybrid HVAC and HVDC interconnection planned Development of Phase-II of National Grid has already

commenced - 3000 MW capacity added 2000 MW HVDC bi-pole between Talcher-Kolar (Asias

largest HVDC Bi-pole) 1000 MW 400 kV AC link between Rourkela and Raipur

(Facilitate Interconnection of ER/WR & NER Cumulative Inter-regional transfer capacity at the end of

2002-03 8000 MW

By the end of Phase-IICumulative Inter-regional Capacity - 23,500 MW

P Pl


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POWERGRIDPerspective Plan

National Grid, Phase-III(by 2012)

Strengthening of inter-regional links to have a ring

of 765 kV lines, inter-connecting Northern, Western

and Eastern Regions synchronously

ER inter-connection with SR to be strengthened

through HVDC bi-pole links (Asynchronous link)

After Phase-IIICumulative Inter-regional Capacity - 30,000 MW


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Private Sector

Participation

P i t S t P ti i ti


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Private Sector Participation Two routes identified

Joint Venture (JV) route

Independent Private Transmission Company(IPTC) route

JV route

Major transmission lines associated with

Tala HEP in Bhutan, estimated to cost aboutRs. 1,100 Crore,

M/s Tata Power selected as JV partner

Shareholders Agreement initialled atmanagement level

IA/ TSA initialled at working level

PIB approval obtained in Dec02. CCEAawaited (investment approval + approval ofcreating a JV company)

Private Sector Participation


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Private Sector Participation

IPTC Route Identified Project : 400 KV D/C Bina-Nagda-Dehgam Transmission line

Estimated cost : Rs. 450 crore.

Consortium of TNB & Kalpataru, the onlybidder

Tariff quoted is 77% higher compared to if the

project to be undertaken by POWERGRID

Petition submitted by POWERGRID to CERC

seeking direction

Hearing held on 25 June03, order awaited


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Assistance

Sought


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Payable Outstanding as on May, 2003 - Rs.429 Crore

Includes Interest Rs. 171 Crore

Major DefaultersBIHAR Rs. 102 crore

DVB Rs. 283 CroreMPEB Rs. 67 CroreManipur Rs. 51 CroreMaharashtra Rs. 17 CroreArunachal Rs. 10 Crore

Tripura Rs. 9 Crore

Madhya Pradesh, Maharashtra, Orissa, Delhi, Tripura,Arunachal Pradesh, Mizoram and Manipur have not signedthe TPA for POWERGRID.


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POWERGRID sought a budgetary support of Rs. 4,907

crore for an investment programme of Rs. 30,143 crore(considering Debt:Equity ratio of 70:30)

Planning Commission scaled down the investment to Rs.

21,370 crore with Net budgetary support to Rs. 1,000 crore.

(Debt:Equity ratio of 80:20)

Taking up the future incremental investment in the limiting

debt-equity norm of 80:20 would create problems for the

Corporation for fund mobilization

Further equity support of Rs 1257 Crore to maintain D:Eratio as 70:30.

NBS to be made available in the form of Equity and not as

Grant.

Contd


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POWERGRIDs losses due to pegging of the tariff @35 paise/unit as per Unified Common PoolTransmission Tariff (UCPTT)Rs. 1012 cr. till 2006-07

To cover this loss to the extent of only 50%, MoPrecommended:

One time upfront grant of Rs. 385 crores and

Equated annual installment of Rs. 33.46 cr. during Xthplan period from 2002-03 to 2006-07 (or additionalupfront grant of Rs. 120.60 cr.)

The proposal is being considered by PlanningCommission.

Some clarification on existing assets was sought byPlanning Commission which has since been

furnished.


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Accordance of Mega Power Project status for thetransmission System associated with Mega GenerationProject. Sipat project of NTPC already granted this status.

Associated transmission project to be granted Mega Power

Project Status. It meets the criteria which are comparable tothose specified for Mega Power Projects:- System forms part of National grid

Catering power needs of more than one state

Introduction of 800 kV state-of-the-art technology

Involvement of huge investment Transmission of large block of power thus reducing ROW

requirements

Economy of scale on account of lower T&D losses

To keep the tariff low for financially poor states


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CCEA may approve a basket of projects, while

individual project approval may be delegated to

MoP.

Pre-PIB limits to be raised from Rs. 500 Crore to

Rs. 1500 Crore. PIB Memo may be circulated while circulating the

FR itself.

Investment approval for projects involving cost up

to Rs. 1000 cr. may be delegated to Board ofDirectors of POWERGRID.


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Review of depreciation norms in transmission tariff

CERC through their notification reduced rate of depreciation from6.12% to 2.91%, which is adversely affecting the financial position

of the company

Payment of FERV on pass through basis

CERC insists that FERV be capitalized and recovered as tariff by

spreading it over the years.

This is putting extra financial burden on POWERGRID due to

mismatch in inflow and outflow, which will have direct impact on

internal resources and capability to add capacity.

Fixation of availability of transmission system at 95%instead of 98%

CEA has recommended 98% availability of transmission system

to ensure grid stability and this norm should not be used for

recovery of transmission charges.

Contd


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Utilisation of Development SurchargeCERC has not notified Dev. Surcharge in revisedtariff notification for Rihand-Dadri Line (1st case)

Applicability of Depreciation Adversely affects the

Financial ratios because of no RoE on DevelopmentSurcharge

Implication of Income Tax on DevelopmentSurcharge

Its utilisation on National Level may be allowed instead of Regional level


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The funding of Chandrapur HVDC B/B project

includes ODA grant of about Rs 322 CrsCERC, through its Tariff Order, has not allowed

the ROE and Depreciation on Grant portion.

As POWERGRID has to maintain the asset andkeep provision for its wear and tear, at least

tariff components like Depreciation, O&M

expenses and Interest on Working Capital maybe allowed.

GOI may notify the Tariff Policy at the earliest


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Penal Interest @24% on cash equivalent ofDeemed Export Benefits (Rs. 265 Crore)

being refunded for Talcher-II project may

be waived off by GOI to reduce the projectcost.

The proposal for declaring POWERGRID

as Navratna, under consideration ofDPE, may be expedited.


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FORMATION OF POWERGRID

Prior to formation of POWERGRID, various

Central Sector Generating Companies e.g.NTPC, NHPC, NLC, THDC, NEEPCO,NJPC, NPC etc. were responsible fordevelopment of generation facility and the

associated transmission system to deliver thepower to the beneficiaries at their sub-stations.

As the capital outlay of generating plants was

much more in comparison to associatedtransmission system, all the generatingcompanies were giving more importance togeneration facilities which led to bottling ofpower in some pockets.


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These Generating companies were makingefforts towards establishing generationfacilities and associated evacuation systems,and no efforts were made by them tostrengthen/augment Regional Grids/National

GridThe transmission system not linked with thegeneration facilities were getting totallyneglected

To surmount these problems, CentralGovernment in 1989 took a decision toestablish POWERGRID for development ofRegional/ National Grids



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MANDATE

Build, Operate & Maintain EHV AC andHVDC Transmission Systems including LoadDispatch Facilities under Central Sector.

MISSION

Establishment and operation of Regional

and National Power Grids to facilitatetransfer of power within and across theregions with Reliability, Security andEconomy, on sound commercial principles.

F t r Fi i l O tl k


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Future Financial Outlook

2419 48188559

650 1420 312510418

31953

54325

1458724645

7300

Present 2006-07 2011-12

Turnover PAT Capital Employed Net Worth

OPERATIONAL PERFORMANCE


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OPERATIONAL PERFORMANCE

Sustained high system availability - over 98%

for last 10 years despite limited / noredundancy in the network, through adoption

oflatest techniques including:

Hot Line MaintenanceEmergency Restoration System

Regular Preventive Maintenance

Thermo-vision ScanningCondition Monitoring of Equipment

Gas & Insulating Oils Testing Facilities.

Stringent Quality Control Measures

HOT LINE MAINTENANCE


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HOT LINE MAINTENANCE


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Technological

Excellence

Technological Excellence


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Application of Series Compensation to improvepower transfer capacity (Kishenpur-Pampore,

Kanpur-Ballabgarh, Panki-Muradnagar, Rourkela-Raipur etc.)

Upgrading of Lower Voltage Lines to HigherVoltage - 66 to 132 KV, 132 KV to 220 & 400 KV,220 KV to 400 KV, 400 kV to 800 kV

Uprating of transmission lines by enhancingConductor Temperature Limit - From 75C to 85

C resulting in approx 30% increase in powercapacity with approx. 1% increase in cost of line

Composite Long Rod Insulators for betterperformance

g

Technological Excellence


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Flexible AC transmission systems

Multi Conductor Bundle, Multi CircuitTransmission Lines

Controlled shunt reactors (developed in

association with BHEL)

Sub-station automation

Compact Air Insulated Sub-stations / Gas

Insulated Sub-stations

Inhouse standardisation of towers and

foundation design

g

TOWARDS GREEN ENVIRONMENT


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POWERGRID developed Environmental and Social

Policy & Procedures (ESPP)First PSU to develop such policy

The key principles of ESPP are Avoidance,

Minimisation and MitigationPolicy developed through detailed interaction

with the Public, NGOs, Project Affected

Persons, Financial Institutions, Governmentagencies, etc.

Being strictly adhered to in all transmission

projects




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DISASTER MANAGEMENT


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Evolved most effective Disaster Management System to

minimize the impact of natural calamities like floods,

cyclones, Earthquake etc. Quick restoration of power supply through Emergency

Restoration System

Gujarat cyclone in 1998, restored within a week

Orissa Cyclone in October, 1999, restored within 11

days

Gujarat earthquake in January, 2001

Restored power supply within one week

Reconstructed 10 damaged Sub-stations within a

record time of 3 months, dedicated to the Nation by

the Honble Prime Minister


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Erection of ERS by Helicopter


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Accolades

Comments of the World Bank


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The availability of POWERGRID system is high(over 98%); System expansion is progressing

at a fast pace and POWERGRIDs largestongoing projects are being implemented in a

highly satisfactory manner-The World Bank, Oct. 96

POWERGRIDs institutional development andgrowth has been impressive. It hasamalgamated staff into a surprisinglyhomogenous team

- The World Bank, Oct. 96

Engineering Specifications, Contract andProject Management, Contract documents has

been of excellent quality- International Consultants to The World Bank, Nov. 96




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Our mid-term review highlighted theimpressive performance growth ofPOWERGRID since the approval of PSDP-I inMarch, 1993 and then had to express theBanks deepening concern about the loss ofdirection since mid-1995.

The World Bank mission was very pleasedand impressed to discover the start of aturnaround. The backlog at the Board hasbeen cleared and project implementation isbeing accelerated. Staff morale is improvingand POWERGRID is recovering the sense ofurgency and direction that used tocharacterize its efforts to improve.

- The World Bank, Dec 1996




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Evolution of innovative Dispute Resolution Panelproved to be very useful and disputes in the single

problem project have been resolved - We greatlyappreciate the reactivation of 800 kV Kishenpur-Moga Project

-The World Bank, Nov. 98 Some of the POWERGRIDs largest on-going

projects are funded under World Bank loans and arebeing implemented in a highly satisfactory manner.Projects are on schedule and reflect POWERGRIDscompetence in inter-national competitive bidding

-The World Bank, Nov. 98

Although there is frustration on the part of Cobra, areview of the issues does not indicate unfairness ormismanagement on the part of POWERGRID. Thiscontract is properly managed by POWERGRID withno evidence of unfairness.

- International Consultants to The World Bank


Comments : Others


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POWERGRID represents an excitingmechanism to centralise Indian Powerstructure on a national basis. ADB welcomesPOWERGRID and look forward to workingwith it in the future. Imagination is needed inplanning POWERGRIDs future and its

management appears to be truly abreast ofthem.- Asian Development Bank, Feb. 2000

Here is an organization that meets its

commitments and values time. I wish thereare more organizations with a similaroutlook

- Dr. Shankar Sen, Former Vice Chancellor, JadhavpurUniversity & The former Power Minister, WB Govt.

Comments : Others



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Future Investment Programme X and XI Plan

(Rs Crore)

Central Sector Investment 70,523 Private Sector Investment 20,895

POWERGRID Investment 49,628

Funding Plan

Internal Resources 8,019

Dev. Surcharge 3,083Multilateral/ECB 14,607Bonds/Domestic loans/NBS 23,919

Total 49,628

P p P

-

eTransmission Organization


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Incorporated in 1989, mandated withEstablishment, Operation & Maintenance ofRegional & National Power Grids including LoadDispatch CentersStarted operation on management basis w.e.f.

August, 1991 for the assets owned by NTPC/NHPC/ NEEPCO etc

Tr. Assets of above companies transferredalongwith manpower as per Presidential Ordinance& commencement of commercial operation since1992-93.Notified as Central Transmission Utility, the statutory

body in December 1998 through Amendment ofElectricity (supply) Act, 1948, to discharge thefollowing functions related with inter-statetransmission Undertake Inter-state Transmission of energy

Planning and co-ordination for inter-state trans.

Transmission Organization

BUDGET UTILISATION


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BUDGET UTILISATION(In Rs. Crores)

Budget Estimate (2002 - 03) : 3352

Revised Estimate (2002- 03) : 2687RE Actual

(2002-03) (2002-2003)

On Going &

Completed Schemes - 2408 2445New Schemes - 151* 50

Telecom - 128* 66--------- -----------

TOTAL : 2687 2561

* Shortfall for want of Investment Approval for Tala & Sipattransmission projects and delayed approval of TelecomProject & Raipur-Chandrapur Trans. Sys.. BPTA for Raipur-Chandrapur is yet to be signed as SR beneficiaries went

back on their commitments.

OBJECTIVES OF POWERGRID


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OBJECTIVES OF POWERGRIDThe Corporation has set following objectives in line with itsMission and its status as Central Transmission Utility:

-Undertake transmission of energy through Inter-Statetransmission system.

-Discharge all functions of planning and coordination relatingto Inter-State transmission system with

(i) State Transmission Utilities;

(ii) Central Government;

(iii) State Governments;

(iv) Generating companies;

(v) Regional Electricity Boards;

(vi) Authority;

(vii) Licensees;

(viii) Transmission licensees;

(ix) Any other person notified by the Central

Government in this behalf.Contd/-

MAJOR ON

GOING PROJECTS


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Cost in Rs. Cr. Ant. Commn.Appd. Ant.

Meramundali - Jeypore 167 143 May03 Series Compensation on 26 26 Aug03

Panki Muradnagar Tehri Trans. System 702 702 Line I - Sep03 *

Line II- Dec03 * ULDC Scheme in NER 264 264 Jun03 Bihar Grid Strengthening 163 163 Jan04 Madurai Trivandrum 196 196 Mar04 KahalgaonBshariff (II Ckt) 136 136 Apr04 Tala-Siliguri 232 232 Dec04** ULDC Scheme in ER 397 397 Dec04

* Clearance regarding Rajaji National Park obtained from SupremeCourt in Oct02.

** Matching with Tala HEP

Contd

MAJOR ON-GOING PROJECTS

MAJOR ON-GOING PROJECTS


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Cost in Rs. Cr. Ant. Commn.Appd. Ant.

Aug. of Gajuwaka B/B

Project (Gajuwaka-II) 769 769 Jan05

Dhauliganga Trans. System 151 151 Jan05

System strengthening Scheme 110 110 Jan05

in Western Region

Ramagundam- III 390 390 Aug05

Tarapur 3 & 4 Trans. System 237 237 Sep05

Rihand-II Trans. System 1044 1044 Aug05

ULDC

WR 262 235 Mar

06 Dulhasti Combined Tr. System 567 567 Jul06

Investment and Funding Strategy


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FutureInvestment Requirements


A. Transmission 28,840 39,183 68,023

Generation Linked Projects 12,340 9,219 19,634

Grid StrengtheningProjects

3,192 5,420 3,192

Inter-regional /Inter CountryLinks

12,005 22,525 41,875

ULDC Projects 1,016 1,016

Investments in JV 204 204

Others 83 2,019 2,102B. Telecom 2,240 260 2,500

Base Network 1,004 1,004

Equity in NLDO & JV 1,236 260 1,496

Total (A+B) 31,080 39,443 70,523

Rs/Crs



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Alternative Options (If Pvt. Investmentfails)If the Private Participation fails POWERGRIDfunding will increase to that tune.

Total POWERGRID investment up to Rs 70,523 Crs

To achieve Debt : Equity Ratio of 80:20 additionalequity support of Rs 2,100 crs from external sourcesis necessary

Additional equity requirement may be provided byGOI as NBS. So total NBS could become Rs 3,100Crs.



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g gy

ImprovedRevenueRealization

Revenue Realization may be improved to100% (as per Ahluwalia Committeerecommendations) Internal resource

generated will be Rs 16,302 Crs andDevelopment Surcharge will be at Rs 3,627Crs as estimated.

In such a case External equity injection of Rs2,100 Crs will not be required.

The Equity contribution 30% of the required

investment (including the Rs 1000 Crs NBS).



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Cess/Infrastructure Status/Diversification/IPO

Creation of National Power Grid Fundthrough imposition of Cess on consumers inthe Power Sector or Through additionalTaxation through Fiscal Policy

According Mega Power benefits toTransmission will reduce the cost of theprojects

Leveraging Transmission Investment bysurplus from Diversification

By tapping the Domestic Capital Markets bymeans of an Initial Public Offer (IPO).

Investmentand Funding Strategy


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g gy

Funding Scenario If Pvt. Investment Fails

POWERGRID FUNDING X & XI Plan

Internal Resources 7039

Development Surcharge 3966Bonds/Domestic Loans 39493

Foreign Borrowings 16925

IEBR 67423

Net Budgetary Support 1000

Equity From External Source 2100

Total 70523

ACTION PLAN FOR 2003 04


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Projects to be Commissioned in 2003-04

1. Series Compensation on Panki-Muradnagar2. Meerut-Stabdinagar

3. LILO Of Panki-Naubasta (Feroz Gandhi Unchahar TL-II)

4. Mehramundali-Jeypore

5. ICT at Biharshariff (Bihar Grid Strengthening)6. Ranganadi-Ziro TL

7. Bongaigaon-Malda at Purnea

8. Purnea-Dhalkhola

9. ULDC North-Eastern Region already commissioned

Stringing to be completed (CKM.) - 1369


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Diversification

into

Distribution

87

POWERGRIDDiversification


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Diversifying into Distribution

MOP assigned 37 circles in 15 states toPOWERGRID as advisor-cum-consultant under

APDRP

Also entrusted co-ordination of other 14 circlesassigned to NPC, WAPCOS and ERDA & 54

circles being developed by SEBs.

Separate Subsidiary Companies beingcontemplated for:

Sub-transmission system

Distribution system

POWERGRIDDiversification


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fBenefits to SEBs :

Improvement in Reliability and Reductionin outages

Increase in Revenue

Remote metering for HT consumers

Average billing for domestic consumers

followed by six monthly reconciliation

Increased no. of collection centres

Use of IT for Energy accounting

Enforcement of stringent Anti-theft Laws

POWERGRID Diversification


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POWERGRIDDiversificationPOWERGRIDs Strategy is based on

High growth potential in the business in line withthe core competence.

Commitment of Govts. for reforms with fundallocation under APDRP scheme.

Association with SEBs as AcC in 33 circles in 16

States under APDRP scheme. Leveraging its vast human resources and

knowledge base Leveraging its rapport with GOI and SEBs Leveraging its strong Balance Sheet as comfort

to lenders, who are shying away from SEBs Leveraging its IT enabled infrastructure for better

management of distribution network Employees participation as equity stake holders

to the extent of 26% in the Subsidiary Company

POWERGRID Diversification


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POWERGRIDDiversification Reputed Domestic consultant appointed to

formulate the business strategy

Recommendations of the consultant : Separate subsidiaries for Sub-Transmission

and Distribution business and strategicalliance with SEBs

Business Models for TransmissionBuild - and TransferBuild Lease Operate and TransferContract Add - and OperateRehabilitate Operate and Transfer

Business Models for Distribution Licensing Agreement with Tariff based onfixed rate of return

Licensing Agreement with Performancebased Tariff

Energy Performance Contracting



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pResourceMobilization


Internal Resources 2,938 5,081 8,019

Development Surcharge 1,1216 1,867 3,083

Bonds/Domestic Loans 8,002 14,917 22,919

Foreign Borrowings 8,214 6,393 14,607

IEBR 20,370 28,258 48,628Net Budgetary Support 1,000 0 1,000

Total 21,370 28,258 49,628



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pPOWERGRIDs Investment


A. Transmission 19,130 27,999 47,129

Generation Linked Projects 7,436 5,945 11,456

Grid Strengthening Projects 3,192 5,420 3,192

Inter-regional /Inter CountryLinks 7,199 14,615 29,159

ULDC Projects 1,016 1,016

Investments in JV 204 204

Others 83 2,019 2,102

B. Telecom 2,240 260 2,500

Base Network 1,004 1,004

Equity in NLDO 1,236 260 1,496

Total (A+B) 21,370 28,258 49,628

Rs/Crs



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Future Funding

Foreign Currency Debt

Current Funding from World Bank, ADB,JBIC, European Investment Bank, KfW

etc. to the tune of US $ 1,500 MillionPresently outstanding loan from IFI is 50-55% of Total BorrowingFunding from Multilateral agency to go

down due to their policy not to fund Gen.Linked projects.Future Funding envisaged at Rs. 9,400Crore (about 30% of funding gap)



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Resource Mobilisation

Internal Resource (IR)Past Trend 1997-98 to 2002-03

Investment : Rs 11,000 CrIR : Rs 1580 Cr (14%) : Projects are being implementedwith High Leverage pulling down the profit

Reasons for Low IRNo return on a portion of equity (Rs 603 Cr) Aberrationin previous tariff normsTariff pegged @35 paise in NER No return on assetworth about Rs 1000 CroreCERC disallows even O&M and Depreciation on grant

High levels of Sundry DebtorsBullet Repayment in the Year 1998-99 and 2001-02 Nil IR

To minimise the future risk capital structure forprojects need to be at least 70:30



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Internal Resource (IR)Future Projection X Plan

Investment : Rs 21,370 CrIR : Rs 2938 Cr (14%)Planning commission has fixed the outlay with D:E ratio of 80:20adding Dev. Surcharge and NBS of Rs1000 Cr to IR

Strings attached to Dev. SurchargeTherefore to maintain D:E ratio of 70:30:

Investment may have to be scaled down OREquity Support from GoI

Future Projection XI Plan

Investment : Rs 28,258 CrIR : Rs 5081 Cr (18%)

If Securitisation Scheme operates in true letter andspirit, IR may go up to

Rs 5,000 Cr( 24 % of Investment) in X Plan

Rs 8,500 Cr (30 % of Investment) in XIPlan



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Resource Mobilization

Development SurchargeCERC has not notified Dev. Surchargein Project specific tariff notification -

Rihand-Dadri LineApplicability of Depreciation

Adversely affects the Financial ratios

because of no RoEApplicability of Income Tax

Contd.



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Net Budgetary Support (NBS)

Resource Mobilisation by POWERGRIDfor X Plan falls short in achieving a Debt:

Equity ratio of 80:20

NBS by Planning commission to bridgethis gap is Rs1000 Cr

NBS to flow as Equity instead of Grant

Investment and Funding StrategyR M bili ti


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Domestic Bond/ LoanFuture Funding envisaged as Rs. 22,000 Crs

(about 70% of funding gap)

During 2001-2002 fund mobilization fromdomestic markets was Rs. 2400 crs.

Average annual fund raising : @ Rs 2200 Crs (to raise Rs. 22000 Crs in 10 years )

Revenue From TelecomHigher growth in telecom to supplement

transmission sector Income from NLDObusiness has been assumed to flow from 2007-08 onwards

Assumed Revenue Rs 663 Cr in X Plan and Rs

2078 Cr in XI Plan



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Net Budgetary Support (NBS)

Resource mobilization by POWERGRID for

X plan falls short in achieving a Debt :Equity ratio of 80:20

NBS sanctioned by Planning Commision to

bridge this gap is Rs. 1000 CrsNo necessity of NBS during the XI plan

Contd.



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International Financial InstitutionsCurrent Exposer from IFIs viz, World Bank,

ADB, JBIC, EIB, WMB, KfW etc. to the tuneof US $ 1,500 million.

IFI funding is about 50-55% of TotalBorrowing by POWERGRID

Future funding commitment from IFI Rs.

6000 CrsWorld Bank has put conditionality in fundingGeneration Linked Projects

Contd.



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Domestic FundingFuture Funding from the Domestic Market envisaged

at Rs. 22,000 Crs (about 70% of funding gap)

During 2001-2002 fund mobilization from domestic

markets was Rs. 2400 crs.Average annual fund raising @ Rs 2200 Crs to raiseRs. 22000 Crs in 10 years

Revenue From Telecom

Higher growth in telecom business can be generatedwhich will supplement transmission sector needs.

Income from NLDO business has been assumed toflow from 2007-08 onwards

DEVELOPMENT OF NATIONAL GRID


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NER

ER

NR

WR

SR

EXISTING

500MW

500MW

MW1000

MW500

GAZUWAKA

CHANDRAPUR

VINDHYACHAL

SASARAM

UNDERCONST.

EXISTING

400 kV

220 kV

BONGAIGAON

BIRPARAMALDA

KORBA BUDHIPADAR

KOLHAPUR

BELGAUM

U.SILERU

BALIMELA

DEHRISAHUPURI

MALANPUR

AURAIY A

PHASE-I

ANDAMAN&

NICOBAR

LAKSHADWEEP

(By 2002)

Back

DEVELOPMENT OF NATIONAL GRID


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ROURKELA

RAIPURHIRMA

TALCHER

JAIPUR

NER

ERWR

NR

SR

B'SHARIF

ALLAHAB AD

SIPAT

GAZUWAKA

JEYPORECHANDRAPUR

SINGRAULI

VINDHYA-

2000MW

3000MW

1000MW

500MW

LUCKNOW

CHICKEN NECK

KRISHNA

TEESTA

MISA

KATHAL-GURI

LEGEND

765 KV LINES

400 KV LINES

HVDC B/B

HVDC BIPOLE

EXISTING/ X PLAN

ZERDA

HISSAR

BONGAIGAON

KOLHAPUR

NARENDRA

KAIGA

MANGALORE

PONDA

IX PLAN

MARIANI

N.K.

KAHALGAON

RANGANADI

SEONI

CHEGAON

BHANDARA

DEHGAM

KARAD

LONIKAND

VAPI

GANDHAR/

TALA

BANGLA

BALLABGARH A'PUR(DELHI RING)

BANGALORE

KOZHIKODE

COCHIN

KAYAMKULAM

TRIVANDRUM

PUGALUR

KAYATHAR

KARAIKUDI

CUDDALORE

SOUTH CHENNAI

KRISHNAPATNAM

CHITTOOR

VIJAYAWADA

SINGARPET

PIPAVAV

LIMBDI

KISHENPUR

DULHASTI

WAGOORA

MOGA

URI

BHUTAN

RAMAGUNDAM

RAVI

JULLANDHAR

DESH

NAGAR

VARANASI

/UNNAO

M'BAD

PURNEA

KORBA

NAGDA

SILIGURI/BIRPARA

NICOBAR

ANDAMAN

AND

LAKSHADWEEP

TEHRI

MEERUT

BHIWADI

BINA SATNA

MALANPURSHIROHI

KAWAS

PHASE - II(By 2007)

SIRSI

CHAL

JETPURAMRELI

BOISARPADGHE

DHABOL

KOYNA

/BARH

G'PUR

HOSUR

Back


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