By the Potencia correspondent
India’s largest power transmission company, Power Grid Corporation of India Limited is reportedly expanding abroad as part of a planned separation of its power management functions. Most importantly it is looking to come to Latin America.
According to Utpal Bhaskar, writing for LiveMint.com, Power Grid is looking to acquire stakes in companies in both Paraguay and Argentina.
The move is part of a larger strategy to enable this state-owned entity to be less dependent on its local market and to take advantage of falling asset prices as a consequence of the continued sluggishness in the global economy.
“We are exploring and pursuing opportunities in Argentina and Paraguay,” a top PowerGrid executive, was quoted as saying in the article. “We should get out of [a single] geography as it is a regulated market in India.”
Amol Kotwal, deputy director of energy and power systems practice for South Asia and West Asia at analyst Frost & Sullivan, told the publication that Power Grid’s overseas purchases will provide the company with sales opportunities in overseas market and lower the risk of local market dependence.
Power Grid gets a guaranteed rate of return on equity of 15.5 per cent in the Indian market, the report said. The utility operates 86 000-circuit km of transmission lines.
Another executive at Power Grid told the publication that the company is looking at expanding its footprint. They said that this can happen through creating new assets or acquiring stakes in overseas assets.
This Indian initiative is just part of a wider movement to develop transmission projects in the Latin American region and many are due to see the light in the not too distant future.
The growing demand of energy coupled with the prospect of it only increasing because of rising population figures in Latin America, as well as greater economic development, has prompted countries to either build new transmission lines or expand the infrastructure they already possess.
In Panama, for example, the country’s Electricity Transmission Company (ETESA) said earlier this month it is working on expanding its electricity grid network to improve the delivery of power to the substation of Changuinola, adding 34.5 MW to its capacity.
Separately, in Brazil, the Ministry of Mines and Energy has said it is working to improve the country’s transmission network with the help of federal company, Eletrobras Eletronorte. The work will be conducted in the western state of Mato Grosso, the Ministry said in a press release.
Given the increasing energy demands, Potencia reported earlier this year that Peru is also building two transmission lines to boost its energy-generation capabilities. The first one is the link Zapallal-Trujillo, with a capacity of 500 kV. Earlier this year, Colombian company ISA emerged as the winning bidder to construct the power link, which will be 530 km long.
ISA won the contract after offering a total of $25.8m in investment, according to the Ministry of Energy and Mines.
For some countries, like Chile, the development of better transmission systems is imperative. Recent blackouts in the country have been linked with ongoing limitations in its power networks, which have caused the Rapel central plant to be unable to supply electricity.
Sebastian Bernstein, former executive director of the country’s energy commission, has said that beyond the drought problems that Chile also experienced, resolving the transmission problems are key to tackling the energy crisis the country is facing, as reported by Noticias Financieras.
But efforts go beyond just individual countries. Earlier this year, delegates from six Central American nations met to discuss the development of the Central American Interconnection System (SIEPAC).
Officials estimate the interconnection project would carry a price tag of $594m and is expected to be financed by the Inter American Development Bank (IDB).
The presidents of the six Central American nations discussed how to reinforce the electricity network with high tension cables, towers and fiber-optic cables. Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama were the countries represented.
For more Latin America news.