Given that we've had a very positive increase in our Capex, announcements for FY26, and we've met our target already. I was just surprised to see that there's no upward revision for the next 2 years. So, any, what is the scope that we envisage there? And second, at what operational capacity are we presently functioning? And at what ability will we be able to participate in excessive projects if they're announced over the next couple of years, vis-a-vis other private players?
Yes, normally, this is our guidelines of Rs. 37,000 crores and Rs. 45,000 crores for next year, and similarly for capitalization, Rs. 30,000 crores and Rs. 35,000 crores. So, normally we have these targets, and we normally surpass our targets given to us. And we will change in between the years, whenever, suppose, we meet after 6 months of FY27, then accordingly, we can change our guidelines, depending on the progress at ground. So, as of now, we are giving this guidance only. Regarding your next question, I think we have sufficient funds to compete in the projects which are going to be available for bidding in the next 2 years, 3 years, 4 years, so we don't see any challenge in this regard.
Understood. And any quantum savings, sir, which is possible? And do we need any approval from CERC for undergoing this, this change?
Yes sir, Yeah, we, so I'll take this, sir. Sir, for any merger, we used to take the approval of the regulators. Yeah, last time also, when we merged 19 companies into two, we took the approval of the regulator in addition to DIPAM. So, similarly, we will approach our Administrative Ministry, who will forward it to DIPAM, and then simultaneously, we will approach the CERC as well as the MCA for this type of merger. There will be some part of, moreover, this is for administrative purposes and governance, we wanted to do these types of mergers more than any cost savings. Ultimately, the line has to function independently for any, technical features that will remain as it is. So, the license, everything will remain as it is. As such, we have not, quantified anything, but definitely this will be helpful in maintaining a lesser number of SPVs, rather than... because already we have 78, maybe going forward when, like, Chairman sir was projecting as, like, the, pipeline of, like, Rs. 7 - 15 trillion, and even if we have, half of that maybe out of 78, another 100 companies will be there. So that's mainly, the focus is on to have a more administrative control, rather than financial savings.
Sir, and on ROW, how are things now? I think there was a major improvement in the last quarter, but now, how are you seeing things? Again, if you could recap, it would be great.
RoW, as I said that it is a challenge. Always it is going to be a challenge, methodology is already finalized, and we also know how to now tackle these RoW issues. So, our team is also trained. And we are able to manage now. Now, you see, in last 6 months, after government has come out with clear guidelines, we have executed a number of projects. So, similarly, this speed will continue now. And RoW will come, and it will get resolved. With the help of Government of India, our Minister, is very positive, so whatever problem is being faced by us, immediately, there is a good support from Government of India.
Just needed to know, what we've heard is, you know, till date we were participating in interstate projects. Now, we intend to also participate in intrastate projects and also battery projects, so if you could highlight some of these opportunities which are coming up. And also, with the emergence of battery and BESS in a big way, how does it alter the transmission capex, I presume, you know, with battery, you don't need to build as much redundance versus of your solar, so if you could just highlight some of these, how is it changing on the planning?
Yes, this, you asked that intrastate and battery energy storage. Intrastate, we are participating. But generally, intrastate projects are smaller projects, so we are not very aggressive in intrastate small projects, because we have so many projects, and because it will require similar effort, similar to bigger projects. So, we are not very aggressive in intrastate. Then, regarding the battery energy storage, we are participating, but we are not able to win, best projects, because in competition there are a number of small, smaller players. And, we have one, only one project. Now, we are working out our revised methodology, and how we can be more competitive. We want to have tie-ups with the battery suppliers in advance. So that our cost can be further optimized. Regarding this requirement of transmission system. If we had to, increase the utilization of transmission system, battery energy storage system at the generating station itself, or RE developer station itself. So, it is going to be the requirement tomorrow. So, number of BESS projects are coming, for, the storage of, energy, which will be, the energy will be fed, in the transmission system in the peak hours or in the evening hours.
Sure, sir, and, you know, the number that you mentioned, even in your presentation, that from 29 to 36, you're expecting average capex of about 40,000 crores and capitalization of 35,000 crores. So, you know, depending on the bid pipeline, so what would... what is the kind of bid pipeline that you are looking at. At least in the near term, for the next 3 to 4 years, you know, normally you give a number. Last time you mentioned about Rs. 70,000 crore worth of projects are in the near-term pipeline, and another Rs. 3.6 lakh crore over the next 4 years, where you might average Rs. 90,000 crore worth of bids over the next 4 years. So, is there any update to this pipeline that you're seeing? You know, in terms of annually, what bids are coming on? What projects are coming up for bidding?
After 2nd February, because I told that this report is recently announced, and this is released recently only. So, any change because of that will be known after some time. So, we are maintaining whatever we have discussed on 2nd February in Mumbai during that investors meet. So, it is... it will remain unchanged as of now. It may change after some time.
Given that we are in a very inflationary period, especially energy, and then there might be a lot of cascading impact on TBCB projects, there is a fixed revenue stream that we will earn, whereas the execution cost, we presume, can see some escalation. So, how are we placed in such a scenario? For the current project, TBCB projects that we've won, and do you expect any hit to the estimated IRRs there?
Thank you for your Query, that we are having a very good project management and this execution efficiency, so we are not expecting any price escalation. There has been some price escalation considering this compensation towards land diminution value. And in case such force majure conditions are there, we are claiming extra tariff from CERC, which is normally given approved by CERC, and we are able to maintain our revenue as per the initial guidance. So, we are not expecting any abnormal price escalation, which is causing our project to be less, returns will be maintained.
Okay, so even in TBCB, like, land compensation and all, you are... you can pass through, even for the bid-out TBCB projects?
Yeah, yeah, so whatever these government guidelines are there at the time of bidding. In case there are some guidelines issued later. So those expenses are normally passed through, and we are given additional tariff because of those conditions.
But, sir, what about the execution abilities? In that context, will we be able... like, with the execution delays, if at all, any that from our end?
There have been concerns about execution delays, as, we said that there were issues of transformer, supply, there were issues of, RoW, there were issues of skilled manpower. So, all the three issues have been addressed. First, RoW issue has been addressed by Government of India by announcing the revised guidelines for compensation for land diminution value, they have increased to 30% for rural area, 45% of semi-urban area, 60% for urban area, metro cities. Second issue was skilled manpower. Now, we have already 5 skilled developmental centers in which we are training about 50 fitters or technicians in 3 months and now 2 more are coming, so we will have almost 7 skill development centers. So, 350 technicians and fitters will be trained in 3 months, and almost 1400 to 1500 technicians or fitters will be trained. Similarly, for transformers and reactors supply and other equipment supply, all manufacturers are now going for augmentation of their capacity. The augmentation capacity will be more than 4 lakh MVA capacity each year, which will be more than the demand of these equipment.
So, if I can... if I've just understood correctly, what you've said is that you may revise your CAPEX guidance further. As of now, you're sticking to that. Second, that you don't anticipate any execution problems that we have faced in the past couple of years and going forward into the next few years and you will be in a position to take on additional orders and at least bid for them and compete with them.
Correct. Actually, why we have given this Rs. 37,000 crores or Rs. 35,000 crores, we have given considering whatever projects we have in hand. And tomorrow, how many projects are going to be, with POWERGRID that today we don't know? But suppose tomorrow, I win more projects. So, definitely in FY26-27, I will invest more money. Similarly, in FY27-28 also, I will invest more money. So, our capex may go high. But, because considering projects in hand, we have given visibility based on the projects in hand, and whatever projects, we are sure that these will be with POWERGRID. Considering that only we have given this guidance.
So, my first question is, is it possible to define the savings from the new corporate structure? And why do we have two new SPV rather than one SPV? And does this mean that the new assets will get built in these two new SPVs, and we won't require a separate license for each SPV.
Actually, for a SPV, as per the DIPAM guidelines our limit for each project was initially Rs. 5,000 crores. So, we could merge only few SPVs as per DIPAM, the equity should not be more than Rs. 5,000 crores. But now, this guideline, or this limit, has been increased to Rs. 7,500 crores. So, accordingly, we can merge more SPVs. So, depending on the size of the SPV. More SPVs are, like, merged, and still we are discussing with, DIPAM, other day we had meeting with the DIPAM also, and now we are asking that this limit should be increased to more than Rs. 10,000 crores, they are considering even 15,000 crores. So, if it is further increased, then more SPVs will be merged into one.
My second question is, there any capex required to evacuate RE capacities. The CEAs come out of the paper that the requirement, the cost, the capex requirement is, overall, is Rupees 7.9 trillion, or roughly Rs. 8 trillion. Is it possible to define the investment requirement to evacuate Ex RE capacity?
Okay, so let me respond. As I told that, for next 10 years, we are, on average, we will have a requirement of Rs. 60,000 to Rs. 70,000 crores. So, considering, even if we have, say, Rs. 70,000 crores means equity will be, say, 20%. So, 16 to 20 somewhere we will have about Rs. 12,000 crore requirements of equity. So today we have profit of Rs. 15,000 plus and as we go ahead, this profit will go to, say, Rs. 17,000, 18,000, 20,000. So, even considering our, compulsory dividend payout, which is about Rs. 5000 crores. So, Rs. 5000 crores plus 12,000 crores will be 17,000 crores. So, we are expecting our profit will be Rs. 17,000 crore, by the time we require Rs. 60,000 crore as a capex. And if we require Rs. 70,000, then maybe 14,000 crore will be the capacity required for equity. And 14 +5, we will have Rs. 19,000. So, before that, our profit is going to be more than Rs. 19,000 crores. So, we don't see any issue in meeting this challenge.
I have two questions. The first question is in relation to the Brahmaputra basin related transmission investments of 4 trillion rupees, and the OSOWOG, which, is about Rs. 3 trillion. When do you expect, associated projects and aboard these teams to start getting awarded? So, when will the tendering activity for this start? Given that number for activities 2035+, but when the awarding start for this?
Okay, it's Brahmaputra, as such, like, already, a transmission system has been already planned and one project is already available for, bidding. Like, Niglok, is stationed in, Arunachal Pradesh, which will be connected to this Lower Subansiri and to our Biswanath Chariali, point, and it will be also connected to upper Arunachal Pradesh. So, because Arunachal has a lot of hydro potential. So, it is almost 35,000+ megawatt hydro potential there. So, number of HVDC stations are planned, HVDC schemes are planned at 800 kV. So, by total, outlook for Brahmaputra Basin is Rs. 6 lakh crores. So, I am considering only Rs. 4 lakh crores up to 2035. Okay, so that is, regarding this, HVDC. So, already, this is planned by CTUIL and CEA, so, maybe in next one year or so, these projects will be available for bidding. Similarly, for One Sun, One World, One Grid, yesterday also our Honorable Minister has mentioned that these, projects with Oman, UAE, and Saudi Arabia. So, these are being discussed at Government level. So, we are expecting that maybe another 2 to 3 years, these projects will also start materializing. By 2035, these projects should be available for execution.
Just on the Leh Pang project, the question is that this forms almost 230 to 250 billion rupees in your work in hand, or Rs. 1.48 lakh crore. So, when is the execution of this project? Now that it is not under HVDC, when is it likely to start? So, what kind of CAPEX are you assuming for that project in FY27-28?
We said that we already have these projects in hand, so we are considering these only. HVDC, we have Khavda to Nagpur already, the one HVDC is there, which is being executed by POWERGRID, which is costing almost Rs. 5,000 crores. So, this is part of this Rs. 1.48 lakh crores, And moreover, this Pang-Kaithal is not part of this. Pang-Kaithal we have excluded from Rs. 1,48,000 crores.
So, my question is, so what is the status of the ongoing capex of Rs. 9 - 9.16 trillion that was announced in 2023, which is the 2023-32 plan? And now this new plan of approx. of Rs. 7.9 trillion, which is from 27 to 36, which has been announced. So, are we envisaging our revision in the existing plan?
Yeah, yeah, because earlier, this plan was after 2032, now it is being revised to 2035. And now, because guidance or planning is based on different conditions. So now, considering 786 GW RE power is non-fossil power by 2035. So, this has been revised to Rs. 9.1 trillion. So, this Rs. 9.1 trillion, or Rs. 9.1 lakh crore will be required after 2035. Earlier, earlier Rs. 9 lakh crore was revised because the number of projects are already executed, or they have been already tendered out.
Just one question as to what you see as your ultimate capacity to deliver. And you give that great example on your visible execution pipeline that says, at an assumed 50% win rate, it could yield projects up to Rs. 7.5 trillion. But to the extent you were successful in 50% or more, what is your true execution capability? You mentioned things like skilled power, access to skilled manpower, but there's procurement challenges as well, and also your own balance sheet and being able to deliver these projects, Clearly, things are done over time, but if we look at today, and what you're able to deliver, what is your true capacity?
In last 3 to 4 years, we have been doing capex of about Rs. 8,000 to 9,000 crores. Last to last year, we did Rs. 12,500 crores. Last year, we did Rs. 26,000 crores. This year, we have done Rs. 35,000 crores. So, as the demand is increasing, demand for execution is increasing, our capacity is also increasing. So, we are continuously increasing our capability for execution. We are developing more and more vendors, we are developing more and more trained manpower, including our capability within POWERGRID also, we are continuously increasing. So, we are very sure that whatever challenge or whatever execution requirement will be there, we are going to achieve. So, from Rs. 8,000 to Rs. 35,000 crores in 3 years, which is almost more than 4 times.
That's right. So, to the extent that you were... had a higher success rate. It won't prohibit you from participating in additional bids.
Yeah, because already, whatever projects we have won under TBCB, our winning percentage has been more than 50%, till today. So, we would like to maintain that 50%.
I just wanted, your take on... I mean, last year we had seen a slowdown in project, tendering, so I just wanted to understand. So last year we saw a slowdown in project tendering, so was it more on the ISTS side or was it intra state projects?
Actually, there have been some issues in planning of, evacuation system from Rajasthan, because, out of, initially, the planning was for 115 GW, from Rajasthan itself. And, so far, only a 73 GW transmission system has been tendered out, and, most of this transmission system is under execution. So, beyond 73 GW, including 2 HVDC. One HVDC is from Bhadla to Fatehpur, second is Barmer to South Olpad. So, beyond this, through AC network, there have been challenges in studies that how to evacuate this power. So, there were some, consideration for considering HVDC, but for HVDC, the landing point, say, in Chhattisgarh, or in, Odissa, that landing Point was... the CTUIL or CEA was not able to finalize those projects, because Landing Point was not getting finalized, because Landing Point means there should be demand in that particular area. So that demand was not getting finalized. So, there were some delays in this tendering of these projects, or planning beyond 73 GW. But now, CTUIL has come out with several projects, even, including AC projects towards Chandigarh, towards Haryana, towards Punjab, towards Western UP, even in MP. Some AC network and also HVDC projects are being considered.
Just, firstly, wanted to ask about, the impact of the GIB, court ruling on GIB on power grid. Did it, were there some projects that, got uncleared, because of this, Ramgarh, Bhadla? So, just trying to understand the increase in capitalization and all. How much of the impact was there on dueling and overall impact of power grid on this?
So, we don't have any impact of GIB in Rajasthan or Ramgarh, that area. So, our projects were... whatever projects, transmission projects were there, it is outside that area. And whatever guidance has been given by Honorable Supreme Court. And, in future. All projects, CTUIL is taking care that all projects are outside GIB area. So, we don't see any impact of GIB on power grid transmission projects.
So secondly, just, want to understand, so there are, a lot of these, pending issues showed up, helping clear up some transmission projects. So, for based on what you're saying on, improving skilled labor force, RoW issues, is it... do we assume that new projects, one, will have two-year commissioning timeline? Because recent projects have taken three, three and a half years for AC. So what is, based on what you see, what is the timeline commissioning for new projects for AC and HVDC?
We have, based on our experience, we have given feedback to Government of India that, 18 months or 24 months is not feasible. This timeline is not right. So, at least we should get 30 months or 36 months for this transmission project to be executed. So, you see that whatever projects are coming now, they are either 30 months or 36 months. So, now we will not have these 18 months or 24 months, and by that time we will be able to execute these projects in that timeline. So, whatever delays you have seen earlier, these were, like, Bhadla Sikar, Bhadla III to Sikar, Bhadla II to Sikar II. So, these are... these were all 18 months, Narela Khetri. So, these are these were all 18 months.. For 18 months, we did not possible to be executed, considering these RoW issues and the supply chain issues.
My question is more macro in nature. Just wanted to understand, you know, given we're sort of sitting in an El Nino situation, where temperatures are expected to, go up materially, how should we think of grid utilization, part one. And part two of the question is You know, last year, what are we sort of thinking of in terms of power deficit, both from gas and hydro? Given there is snow buildup, especially in hydro, it is not adequate, and gas, of course, we know from the Middle East situation that we are going through.
Yeah, in this regard, our Honorable Power Minister has reviewed the situation. Yesterday, also, there was a review meeting by Honorable Prime Minister regarding this energy challenge and energy crisis, possible energy crisis in India, and, in turn, our honorable power minister has taken a review of all the, stakeholders, like, Ministry of Power and CEA, and NTPC and other things. So, as per the discussion, as per the, this Grid India, or CEA We are going to have almost 270 GW requirement in May or June, and for which we have sufficient resources to meet that requirement. And, like, last to last year, we had about 250 GW of demand in summertime, which was on I think 24th May 2024. And again, now in May, June, July, that time, this demand is going to increase somewhere about 270 to 275 GW. So, we are prepared, Grid is prepared to meet that requirement, as per the discussion and review taken by our Honorable Power Minister.
Just want to ask you, on this, Rs 7.9 trillion plan that we are talking about, and, you know, you mentioned that the earlier Rs 9.1 trillion plan has now been revised, so On your earlier call, you had mentioned that of that Rs 9.1 trillion, around Rs 2.4 trillion has already been bid out, and over the next 4 years or so, we could expect another, you know, another Rs 4 trillion worth of projects coming into the bid pipeline over the next 4 to 5 years. So, how has that changed with the new, revised, sort of, transmission opportunity from FY27-36? One, could you, you know, comment on, of that original Rs 9.1 trillion, how much has already been bid out, and, you know, how much of that has been, you know, that requirement has been met, and subsequent from here till FY36, how you see the upcoming bid pipeline over the next 3 to 4 years, whether there's any changes in that, given the new plan by CEA.
Like, as per this report, which was released on 19th March in the Bharat Electricity Summit, and this report is recently prepared, so whatever ongoing projects were there earlier, before this report, they will continue to be there. And additional projects which have been identified, so the CTUIL and CEA will further work out on these projects, and when they will be available, that will be known only after some time. So today, I cannot comment on that. And, regarding this, let me clarify that Rs. 1,48,000 crores work in progress is, considering that Leh Pang, earlier we have considered Leh-pang, that, Pang Kaithal project HVDC project into our account, but now we are not... we are excluding that project because it's... still, it is in fluid condition, because in between there was a discussion that it will be, changed to AC network. So, that is why we have excluded from our guidance. And now Rs. 1.48 Lakh crore is including CWIP. So, it is not excluding CWIP. So, 1.48 minus 49. So, we have about Rs. 1 lakh crore projects, practically for CapEx. Unless we win more projects, or unless until we get this Leh - Kaithal AC or HVDC project given to power grid again.