Private sector giant Sterlite PowerTransmission Ltd is bullish on new business opportunities in the transmission space. The country needs a whopping $50-80 billion investment over the next five years alone to fill the gap that exists in the availability of world-class power transmissioninfrastructure, Managing Director and Group Chief Executive Officer (CEO) Pratik Agarwaltells ETEnergyworld in an exclusive interview.
How do you evaluate the growth potential of India's transmission sector? What are the underlying challenges?
Considering the capacity addition from the government’s power for all mission and the 175 Gw renewable integration target, India currently needs about US$ 50 billion to US$80 billion investment in the transmission sector for the next five years alone. There has never been a better time to be in the transmission business in India. However, the biggest challenge is going to be the technology; how do we build these assets in half the time than they are traditionally being built. This is exactly what Sterlite power is focussed on.
With huge capacity addition in renewable energy , does the country have a robust state level transmission infrastructure in place?
I don't think all the states have the requisite transmission. For instance, Rajasthan and Tamil Nadu which are the most natural resource enriched states probably will see a shortage of transmission this year. I think other states like Madhya Pradesh, Maharashtra, and Karnataka are in a relatively better position. Today, there are more than Rs 80,000 crore projects under implementation and once these will start coming it will reduce the load on the overall sector.
Are there specific challenges with respect to the pace of manufacturing in this sector?
Manufacturing is not the issue. The real challenge is a construction that takes a very long time because of the existence of old technologies. We at Sterlite have pioneered on the use of drones and helicopters. We have recently built a project in Kashmir, two months ahead of schedule which has never happened in this sector before. It is all about competitive forces, if you create competition and unleash the forces of competition, all problems will get solved.
Do you think India needs more privatization in the transmission sector to quickly ramp up infrastructure gap?
Transmission is already privatized largely and now new projects are coming on Tariff-based Competitive Bidding (TBCB) basis where everybody including Public Sector Undertakings (PSUs) are competing. In distribution, there is hardly any competition except for a few cities. If you are a telecom customer and are unhappy with a service provider then through mobile number portability you could switch to other operators. In the distribution sector, you can't do that, the consumer cannot switch to another distribution company no matter how good or bad is the quality of service. The new policy in the electricity act will allow competition in the distribution space. Therefore, the power will move to the hands of the customer and then all the companies will do the necessary innovation and investment to become customer friendly.
How has been the business growth from other geographies? Any new innovation that you are currently working on?
We are focused on growing geographically. Recently we have witnessed business growth in Brazil and became one of the top ten players in their transmission sector. In our solutions business, we are doing many new things including what we call master system integration where in place of old lines we are putting new transmission lines. This helps in increasing capacities around five to ten times using the same space.
What are the chief differences between the policy in India and Brazil as far as transmission is concerned?
India's policy is very good. Brazil is slightly better as it has got 25 years of history in this sector. It has got a very predictable order pipeline. Every year they have two auctions and they auction about US$ 6 billion projects. I think India should have predictability in its order pipeline so that companies can plan themselves better.
What is the current order book position of the company? What is the expected growth in orders this year?
We can't share growth numbers since we are not a public company. However, there is tremendous growth in this sector and all our businesses will grow between 20 to 40 per cent.
Do you visualize new opportunities in the cross-border electrification space?
In the cross-border electricity trade, there are a lot of developments. Neighboring countries like Nepal, Bhutan, Bangladesh, Sri Lanka would be connected to each other and trade power. We hope to build those transmission lines as well.
Read more: ET Energy World