Vimal Kejriwal, Managing Director and CEO, KEC International
How KEC is leveraging the opportunity in the transmission sector, especially electrification of railways?
We have been in electrification since 1961. Till today, we have electrified more than 14 per cent of the entire network of Indian Railways. For the current financial year, we will be completing around 1,000 km of railway electrification by March-end. So, we are hoping that we should get some more orders. Going forward, this year, our total order intake from railway business should be around Rs 30-40 billion only from railways. So, our total order intake for transmission business is in the range of about Rs 126 billion. That is our total order intake. As far as the order book is concerned, it is Rs 170 billion in addition to Rs 30 billion L1 orders.
We haven't seen much of traction in transmission sector. But, your order book depicts a different picture..
Coming back to India, with Power Grid Corporation (PGCIL) not getting nominated contracts from the Centre, that gap is either being filled by PGCIL winning
tariff-based competitive bidding (TBCB) or private sector receiving through TBCB route. In a way, if you add projects won by PGCIIL and private sector together, the industry will still reach the market numbers.
Today, I think most of us only look at power grid ordering. That is the only public figure available. There is no assimilation of data from state electricity boards (SEBs) in terms of ISTS projects, which has led to the perception of India not doing good in this segment. But our order book is pretty comfortable since we are diversified into railways, EPC and solar.
Since 14,000 ckm of ISTMS projects are under construction, do you see a refinance or a bond opportunity for the sector?
There is a lot of talk going around for raising funds through bonds for transmission sector. We have witnessed success in roads so far. However, I am not sure about the success of bonds in transmission as there are not much of orders. I don't see PGCIL monetising their assets as National Highways Authority of India (NHAI) managed to leverage. For NHAI, it's a win-win proposition as they have many orders to award and have cash flow stream in hand. Hence, I don't see any need for players raising funds through bonds in transmission sector.
How KEC brings in their technology to improve the existing transmission lines?
With issues in land acquisition and forest and environment clearance, at present there is a need to upgrade the current transmission network. Importantly, these are not age-old infrastructure as some of the transmission corridors were constructed 15 years back.
So whenever you need to increase capacity, instead of greenfield transmission projects, its better and easier to strengthen the existing line by putting advanced conductors.
However, we have not seen spend on upgradation of transmission lines by state governments. There are a few states which are doing a lot of work on upgrading their network, others are not spending, hence end-up in purchasing power at a higher cost.
How do you view the progress of UDAY and its impact on SEBs?
For me, UDAY is like just another scheme with little progress, where funds were given to ailing discoms with little progress on the root cause i.e. AT&C losses. If you see, on ground, the AT&C losses have come down by just 1 per cent, so where exactly is the progress? It has happened earlier, and being replicated now too.
In a way, the scheme has helped state discoms in bringing down borrowing costs as the risk has been shifted from utilities to the state government. But, in this case, the debt is now shifted from state discom's book to the state government.
What is your view on the power sector?
At the state level, there is a need to invest in capex of transmission projects. This is mainly because, considering the amount of solar projects installed now, and likely to come up in the next couple of years, suddenly there will be a huge uptake for transmission network required. Since solar projects takes around 12 -15 months for completion, there is no way private transmission players will match that speed. And considering PM Modi's push for solar, we see a significant push next year.
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