Focus on rural electrification and higher funding is driving investment in transmission infrastructure
Even though the power sector is trying to recover from a mountain of debt and stalled projects, there's significant action on the ground when it comes to building transmission infrastructure.
And that's benefiting major private sector players like Essel Infra, Sterlite as well as the smaller sub-contractors who are winning bids to create that infrastructure for several state government utilities and public sector undertaking Power Grid Corp.
"While power sector per se is going through a slowdown, there is significant activity in the transmission and distribution (T&D) projects, in last-mile connectivity and rural electrification because of historical under-investments. While we have been seeing significant investments from Power Grid, now a lot of orders are coming from private investment in transmission projects also which wasn't there earlier. Companies like Sterlite Power, Essel Infra, Adani were participating in Tariff-based competitive bids. We are getting the EPC (engineering, procurement, construction) contracts from these private parties," said Sharan Bansal, director of Skipper Ltd, one of the transmission EPC providers, said.
Focus on rural electrification drive supported by funding from this year's Budget as well as from several multilateral funding agencies are giving the necessary push to T&D projects.
Essel Infrastructure, for example, has won prestigious projects like Darbhanga Motihari Transmission line for strengthening the eastern network and another project to connect national power grid to the southern region, both through tariff-based competitive bidding route.
"State transmission companies have also started investing in their networks. For the first time, they are getting multilateral funding from Asian Development Bank and KfW (of Germany). In the medium term, state electricity boards would remain quite active," said Bansal.
States like Rajasthan, MP, Andhra Pradesh, Telangana, UP and Bihar are investing significantly in transmission lines, Bansal added.
"States like Orissa, Bihar, and Rajasthan are coming out with more tenders whereas orders from Power Grid are plateauing," Centrum Brokerage said in its report on KEC International, a sector major.
Ashoka Buildcon is another such transmission EPC provider benefiting from the government drive.
The company has received major power T&D EPC orders for rural electrification in Bihar valued at Rs 950 crore, it has disclosed in its earnings details.
Also, some major transmission projects are in the process of being finalised like the 2,000-kilometre Raigarh-Pugalur High Voltage Direct Current transmission line, Power Grid's largest such project, which Bansal says is valued at Rs 20,000 crore.
"The earlier tender floated was cancelled and is now under tendering again."
In north-east, Power Grid is executing Rs 10,000 crore worth transmission project, which, split under several projects, is also under tendering at various stages.
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Essel Infrastructure, for example, has won prestigious projects like Darbhanga Motihari Transmission line for strengthening the eastern network and another project to connect national power grid to the southern region, both through tariff-based competitive bidding route.
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