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A partnership beyond expectations: The story of POWERGRID

June 2, 2008

A decade and a half into its existence, the country's central transmission utility POWERGRID has grown by leaps and bounds.

Mandated to facilitate transfer of electric power across India, POWERGRID has managed to link a country as vast and diverse as India through a transmission network of sub-continental magnitude. Today, hydropower from the far east of the country in Arunachal Pradesh can travel through the logistically overwhelming "Chicken's Neck" of India, near Siliguri to light up homes in Uttar Pradesh; power engineers in Tamil Nadu in the deep south keep close tabs on the weather forecast for Punjab in the north to assess opportunities for power trading; and the gas-based Kayamkulam power station located at the southern tip of the Indian mainland close to Kanyakumari is activated in the winter months to warm the freezing nights in the Kashmir valley. Such a unique integration was possible because POWERGRID was able to tap into this diversity of India to harness opportunities to enhance availability of power. It is now possible to better manage demand-supply by transfer of power across states and regions as their electricity needs rise or ebb.

Created out of the assets from nine companies, POWERGRID, which manages the transfer of electricity across India, had modest beginnings. From an asset base of US$ 880 million, its assets have grown more than six-fold to US$ 7.3 billion and revenues have grown six-fold to US$ 1 billion in 2006-07.

Today through a series of investments amounting to over US$ 2.5 billion since 1993 and an intensive capacity-building support, the World Bank has helped POWERGRID emerge as the world's third largest transmission utility. So much so that the company has now diversified into telecom and also provides international consulting services on transmission projects, most recently in Afghanistan. In 1992-93, when POWERGRID started its commercial operations, it had about 22,230 circuit kilometer (CKM) of transmission lines. By 2007-08, this had more than tripled to about 67,000 CKM. During this period POWERGRID's transformation capacity grew about six-fold from 12,200 Million Volt Amperes (MVA) to 73,000 MVA. Its turnover of US$ 159 million has increased more than seven-fold to US$ 1,175 million and net profit has increased six-fold to reach US$ 355 million in 2007-08.

The World Bank has partnered POWERGRID since its inception in 1989. Not only has it financed its investment programs but has also provided support in achieving world-class operations and management. Under a series of Power System Development Projects the World Bank has so far given four direct loans to POWERGRID - PSDP-I loan in 1993, PSDP-II in 2001, PSDP-III in 2006, and PSDP-IV in 2008 which together with loans transferred to POWERGRID from its parent entities amount to about-USD 2.5 billion. The partnership with the World Bank has also helped POWERGRID strengthen its procurement policy and procedures; improve the accounting, budgeting and financial management systems; use modern technology and techniques; and adopt a comprehensive corporate environment and social safeguards policy.

POWERGRID’s performance tells its own tale. In 2001-02, there were 74 minor grid disturbances and three major ones, when entire cities and regions had to cope with blackouts. But that’s history now. It got rid of such failures by strengthening transmission lines and establishing world class regional load dispatch centers.

Though voltage fluctuations are a local issue, POWERGRID has played a remedial role here as well. For instance, take the city of Bangalore. In 2002, the voltage at 400 kiloVolts (kV) sub-stations routinely dipped to 310-350 kV levels. By 2006, it was strictly in the 390-395 kV band, with occasional dips to 380 kV. Anecdotal evidence suggests that improved voltage has increased supply of potable water to Bangalore, as the booster pumps used at the water source tend to work more efficiently and trip less often.

Protecting the environment
One of POWERGRID's most successful achievements have been in managing and protecting the environment. It has undertaken several technological innovations aimed at minimizing damage to natural resources and human habitat. POWERGRID used Geographical Information System (GIS) and satellite imagery to determine transmission line routes, and sites for substations.

In sanctuaries and protected forests, this saved much green area from being cleared. In some cases, transmission line length had to be increased to bypass thick forests. In others, the height of the towers was increased substantially to minimize impact on forests. While building the Tehri transmission line, which passed through the Rajaji National Park, initially the number of trees sought to be cut was 90,000. POWERGRID decided to design 75 m high towers and the number of trees that had to be removed came down to 14,700 - nearly one-sixth of the original. There were times when towers as tall as 140 m were erected to avoid damage to forests and water bodies. The larger impact of all these measures was that in the last 10 years use of precious national resources like forests have been reduced to a bare 2 percent from 6 percent. POWERGRID has paid state forest departments US$ 50 million over the past decade for compensatory afforestation on 20,000 hectares of land.

Whether it was ensuring mandatory use of Chlorofluorocarbon (CFC)-free equipment and thus contributing to the fight against ozone depletion and global warming, or undertaking afforestation on large tracts of land in almost all sub-stations, POWERGRID has been alive to its green obligations.

Today it is recognized as a role model among developing country transmission utilities. Its success with transmission network operation, load dispatch and project management has made POWERGRID sought after in many developing countries. It is already busy in Nepal, Bhutan and Afghanistan, constructing towers in some of the riskiest terrain on the planet, and is looking to work in a host of other countries from Ethiopia to China. It is also providing project development support to state power utilities in Bihar, Uttar Pradesh, Goa, Gujarat, Meghalaya and Tripura.

To complete the basket of projects initiated under PSDP III and IV, POWERGRID plans to borrow an additional $400 million from the World Bank. It is also exploring the possibility of sub sovereign (without government of India guarantee) funding from the World Bank Group through the International Finance Corporation (IFC), a member of the World Bank Group.

Poised to achieve manifold growth domestically, and having set its sights beyond national borders, POWERGRID is now aiming to establish itself as one of the leading transmission utilities of the world.