The Hindu : Power Grid telecom project awaits Cabinet nod

Online edition of India's National Newspaper
Tuesday, Feb 25, 2003

Business

Business

Power Grid telecom project awaits Cabinet nod

By Pratim Ranjan Bose

KOLKATA FEB. 24. The Rs. 20,000-crore power transmission monolith, Power Grid Corporation of India (PGCIL), is set to clear its first hurdle in diversifying into the telecom business. According to sources, the corporation's proposal for creating a 320 gbps backbone by laying 13,000 km optic fibre cable, using its overhead high voltage transmission lines across the country, at an estimated cost of Rs. 1,100 crores may be cleared by the Union Cabinet this week.

The decision would enable the company to raise institutional finance and was due to be taken last week. Power Grid will lease the bandwidth to telecom operators. As envisaged, the network will connect 56 cities including all metros, major cities and towns.

The project was the first step in reaching PGCIL's ultimate goal to be a national long distant telecom operator (NLDO), as practised by the transmission companies worldwide. Also, the diversification was aimed towards optimising its investments in creating power transmission network and create additional resources to support its plans to invest Rs. 80,000 crores in creating the national grid. As per the company's estimates, securing a minimum of 6 per cent share of the telecom business would ensure 25 per cent internal rate of return. Conceived to be set up with $117 million World Bank assistance in 1999, the proposal was cleared by the Union Power Ministry, the Public Investment Board and drew favourable response from the standing committee on energy, 2001, but stumbled (arguably) at the stiff resistance from some private telecom operators.

Accordingly, the proposal was hanging fire for long till the former minister for communication and information technology, Pramod Mahajan, cleared the telecom backbone project days before the Cabinet reshuffle.

Having received the formal approval of the Group of Ministers (GoM) early this month, the Union Power Ministry requested the World Bank to reconsider its decision of withdrawal of the sanctioned credit. World Bank withdrew from the project due to delay in clearing the same by the Centre.

Meanwhile, armed with an approval from its board, the corporation had already created about 6,000 km backbone worth over Rs. 600 crores out of internal generation.

With the part completion of the project, the needed institutional finance has come down from Rs. 600 crores to less than Rs. 500 crores. Moreover, "the Cabinet approval if it comes will allow us to create a higher bandwidth backbone," PGCIL sources said.

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