Sterlite Power To Build $4-Billion Transmission Assets In JV With GIC, Says MD

The company entered into a joint venture with GIC in March, with the aim of partaking in substantial part of the $50 billion worth of transmission projects that the central and state governments will award in the next six to seven years.

“India is expected to award $12-13 billion of projects this year. Historically, we have had 20-25% of the market share, and we are executing around Rs 12,000-14,000 crore of projects at present,” Pratik Agarwal, managing director of Sterlite Power, told NDTV Profit. “We expect to win many more such projects in the BOT (build, operate and transfer) business and retain our market share of 25%."

The JV platform will own the greenfield projects for its lifetime of typically 30 years. It will operate them and earn revenue. Over time, the platform will also raise debt, equity or InvITs as and when required to create shareholder value, Agarwal said.

As of now, there are nine transmission projects—some operational and others in various stages of development.

The company on Friday announced the demerger of its products and services business, which involves manufacturing of transmission products—such as underground cables and overhead conductors—into a separate entity, and the transmission infrastructure business into another entity.

“We expect the regulatory approvals to come in the next two quarters, since we have already secured all the necessary stakeholders' approval,” Agarwal said.

The company may also look at an exchange listing of the demerged products and services business at an opportune time, he said.

Given the growth potential in the power sector, the company is hopeful that both the BOT and the manufacturing businesses will unlock huge value for the concerned investors in the coming years, the MD said.

Serentica Renewables, a wholly owned subsidiary of Sterlite Power, has contracted close to 4,000 MW of projects from commercial and industrial customers. Of this, around 500 MW is already operational and the power is sold to large metal companies.

“We plan to focus on the C&I segment, since this segment constitutes around 35% of the total electricity market of $100 billion. And, it is growing faster than all other segments at a CAGR of 10-13%, which means it will double in the next seven years,” Agarwal said.

However, 90- 95% of the C&I segment is dominated by state distribution companies, or by regulated monopolies, which means there is very little scope for private sector participation. They have not been able to deliver the services that the industries command. Especially, 24x7 renewable electricity and at an affordable rate, he said.

With the participation of private companies, India’s power sector is likely to see a revolution, similar to what the telecom industry saw in terms of better services, he said.