Power Grid becomes the first PSU in the sector to undertake asset monetisation through InvIT

CAPEX plan of Power Grid stands at Rs20,500cr for the next two financial year involving FY21 and FY22.

Sep 09, 2020 05:09 IST India Infoline News Service

Power Grid Corporation Of India
Cabinet has approved asset monetisation of Power Grid Corporation through Infrastructure Investment Trust (InvIT) model. The latest cabinet committee chaired by Prime Minister Narendra Modi, Power Grid's decision to fund the new and under-construction capital projects.

With this, Power Grid also becomes the first PSU in the power sector to undergo asset recycling by monetising its assets through theInvITmodel and using the proceeds to fund the new and under-construction capital projects, said Power Ministry in a statement.

Such would enable Power Grid to monetise in the first lot, assets with gross block value of more than Rs7000cr.

According to the ministry, these assets, which are mainly High Voltage Transmission lines and substations, are held by POWERGRID in the form of Special Purpose Vehicles (SPVs). The ministry said, "The proceeds from the asset monetization would be deployed by POWERGRID in their new and under-construction projects."

The approval was accorded to monetise transmission assets held in SPVs through InvIT model.

Power Grid will utilize the proceeds for its CAPEX and the premium generated would augment the company's net worth.

The ministry said, asset recycling is a key strategy of the Government of India to release the capital invested in operational assets and the proposed InvIT of POWERGRID would attract both domestic as well as global investors including Sovereign Wealth Funds. Sale of assets to InvITs is a way of accessing long term, relatively cheap finance required to fund infrastructure projects in Transmission Sector.

CAPEX plan of Power Grid stands at Rs20,500cr for the next two financial year involving FY21 and FY22.

On Sensex, Power Grid's stock settled flat at Rs175.25 per piece. 

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