Power Grid Corporation of India Ltd. (“PGCIL”)

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Country India
Sector Energy Generation/T&D
Signing Date July 24th, 2012
Total Project Cost $2,352M
ICF Debt Pool Exposure $50M
IFI Exposure $562M

Project Description

Established in 1989, PGCIL was created as part of the Government of India’s initiative to consolidate all interstate and inter-regional electric power transmission assets of the country’s government owned generation companies into one single entity and has now grown to become the world’s third largest power transmission utility. PGCIL is undertaking a large investment program over the next 5 years in order to strengthen a national grid that connects dispersed generation and load centers across India and reduce the large energy demand-supply gap. The proceeds of the facility will be used for capital expenditures on transmission projects to occur in FY2012-13 and FY2013-14.

 

Financing Structure

Financing Structure comprised of $50m from ICF-DP, $100m from IFC and $412m of sovereign guaranteed multi-lateral loans.

 

Infrastructure Component

The facility will increase badly needed infrastructure (transmission lines, substations and transmission interconnect systems) in the power sector which has a significant deficit in power supply. The transmission system expansion will accompany development of new power generation capacity and also increase capacity of the existing transmission system.

 

Investment Rationale

Strong Borrower: Strong management in place with vast experience in the Indian power sector. Established in 1989, Created as part of the Government of India’s initiative to consolidate all interstate and inter-regional electric power transmission assets of the country’s government owned generation companies into one single entity and has now grown to become the world’s third largest power transmission utility.

Competitive Position in Industry: Market leader owning and operating over 95% of India's interstate and inter-regional power transmission lines.

Strong Project Rationale:  Grid investments are critical to support the growth of the sector and optimise the location and efficiency of generation.  Strengthening the grid will improve system reliability, access to electricity and thus foster economic growth and development.

 

Development Impact

The loans will support PGCIL’s 2012-2013 capex program to build transmission systems in the eastern, Western and Southern regions of India associated with new generation capacity and for transmission strengthening projects in the northern region. These projects will provide many thousands of towns and villages with dependable power thereby improving commercial, educational and personal development and well being.

 

Additionality

The fund has provided a 15 year loan.  At the time of funding, there are very few sources of funds available for such maturities.