PowerGrid IPO not this fisc

Powergrid Corporation has conveyed to the finance ministry on its inability to go in for an initial public offering (IPO) before the first h...

Powergrid Corporation has conveyed to the finance ministry on its inability to go in for an initial public offering (IPO) before the first half of fiscal 2005-06. PowerGrid is believed to have said its IPO would have to wait till the Centre compensates it for its accumulated losses over Rs 1,200 crore since 1998 on the north eastern transmission network. The north eastern states have been paying just one third of total charges resulting in this situation.

Government sources said, ‘‘PowerGrid Corporation has sought time till the first half of 2005-06 for its IPO. The Corporation wants the Centre to help it deal with accumulated losses of over Rs 1,200 crore on the north eastern transmission network. We will look into PowerGrid Corporation’s issue in this regard’’.

The PowerGrid Corporation plea to the finance ministry comes at a time when the disinvestment secretary announced that IPOs of PowerGrid and Power Finance Corporation are in the pipeline.

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Sources said the north eastern transmission network was commissioned by PowerGrid during the National Democratic Alliance regime in 1998. However, due to the non-payment of full charges by the north eastern states, there has been a shortfall in revenue collection.

‘‘PowerGrid wants the Centre to resolve this issue first and then ask it to go for its IPO. The Corporation, in the meantime, will appoint a consultant to work out the details for the proposed IPO,’’ sources noted.

The Corporation registered a profit of Rs 748 crore over a turnover of Rs 2,805 crore in FY 2003-04, a growth of 11 per cent in turnover and 16 per cent in net profit compared to FY 2002-03.

The Corporation, in its 03-04’ annual report admitted that its performance could have been better but for the continued revenue gap in north eastern region and the delayed commissioning of hydro projects, which adversely affected its return on investments. Delayed commissioning of hydro projects continues to be a cause of concern despite its best efforts to coordinate their schedule. The revised tariff norms have also affected the Corporation’s profit and turnover.

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PowerGrid Corporation has replaced costly loans worth Rs 1,575 crore with cheaper loans, which resulted in reduction of tariff by Rs 90 crore in FY 2003-04. This saving has been passed on to various beneficiary states.

An investment of Rs 70,000 crore has been planned for the creation of a national grid during 10th and 11th Plan period. Out of this, PowerGrid Corporation’s share is Rs 50,000 crore, which it hopes to arrange.

However, PowerGrid Corporation has noted that the proposed investment of Rs 20,000 crore through private sector largely depends on government policy and Central Electricity Regulatory Commission regulations.