LandT, Bhel to gain from new PGCIL norm

MUMBAI: Competition for high-voltage power sub-station projects is heating up after state-run Power Grid Corporation of India (PGCIL) altered the eligibility criteria for the bidding process for the segment.

Power Grid, which transmits 45% of the power generated in the country through its over 81,000 circuit-km transmission lines, has separated the circuit breaker and sub-station packages in tenders floated over the past few months. This has paved the way for newer players to join the bidding process.

So far, only leading multinational transmission and distribution companies -such as ABB , Siemens and Areva T&D , which together account for almost 70% of the high voltage 765 kV market in the country-were qualified for the 765 kV circuit breakers, and domestic engineering companies found it difficult to match the price if they procured circuit breakers from foreign vendors.

"PGCIL move to award tenders for sub-stations projects and circuit breakers separately gives new entrants such as Crompton Greaves, L&T and Bhel a chance to participate in this growing market," Lakshminarayana Ganti, research analyst at BNP Paribas Securities Asia , said in a report. High-voltage circuit breakers protect and control electrical power transmission networks.

Sub-stations are installations in the power grid that transform voltage levels and facilitate safe and efficient transmission and distribution of electricity. Power Grid plans to invest about. 55,000 crore during the 2007-12 Plan period to develop transmission systems. Infrastructure based on high voltage 765 kV would account for around 30% of the company's total transformation capacity target.

"International players had a cost advantage in the high voltage market, as they also manufacture some components. But it is a crucial and growing area in T&D space and we have worked towards pre-qualification to make ourselves eligible," KV Rangaswami, president (construction), Larsen & Toubro, said. Crompton Greaves, which acquired high voltage technology through overseas acquisitions, has come up as a strong player in the domestic transmission and distribution market.

"In India, the T&D equipment sector presents opportunities amounting to some $123 billion over the country's 11th and 12th Plan periods. Historically, Crompton Greaves has had a market share of 6-7 %. However, as it moves up the technology curve, and with its head-start over domestic competitors in the 765 kV space, Crompton Greaves could grow its share," Amar Kedia, analyst at Nomura Financial Advisory and Securities (India), said in a report recently.

Analysts say near-term order inflows may remain elusive as order revival from Power Grid is likely only in the second half of 2011, but the competition for these order would continue to increase.