India’s leading energy company Tata Power has received a major order in the power transmission sector, which is expected to further strengthen the company’s long-term earnings and infrastructure portfolio. This project will be developed in Karnataka and under this, about 250 km long transmission line will be laid.
Business News: Tata Power, the flagship energy company of the Tata Group, has achieved a major achievement by further strengthening its presence in the power transmission sector. The company said in a stock exchange filing that it has received ‘Letter of Intent’ (LOI) for an important project from REC Power Development and Consultancy Limited, a wholly owned subsidiary of REC Limited.
The acquisition of this project will expand Tata Power’s transmission business and further enhance the company’s role in strengthening the power infrastructure in the country. This contract has been awarded through a Letter of Intent (LOI) issued by REC Power Development and Consultancy Limited, a subsidiary of REC Limited.
The project will be developed on BOOT model
This project will be based on Build-Own-Operate-Transfer (BOOT) model. Under this, Tata Power will acquire a Special Purpose Vehicle (SPV), which has been named Ryapte Power Transmission Limited. The company will operate this project for a stipulated period and later it will be transferred as per the stipulated conditions.
The biggest feature of this project is its long-term revenue model. Tata Power is expected to earn annual transmission charges of approximately ₹521.07 crore every year from this transmission project. Overall, this project will provide stable and regular income to the company for about 35 years, which is also being considered a positive sign for investors.
Construction work will be completed in 30 months
A deadline of 30 months has been set to complete the construction work of this project. This period will commence from the effective date of transfer of the SPV. The transmission network will be fully operationalized after completion of construction. Under this project, several important infrastructure works will be undertaken to strengthen the power grid in Karnataka:
- Construction of 400 kV D/C transmission line
- Development of 220 kV D/C line
- 220 kV underground cabling
- Establishment of 400/220 kV GIS sub-stations (at two major locations)
The main sub-stations will be set up at Ryapte in Tumkur district and Doddathaggalli near Hosakote. This network will connect areas like Rayapte, Doddathgalli, Kolar, Ekrajpura and Sarjapur to the electricity grid, which will make the energy supply system in the state more strong and stable. The impact of this news has also been seen in the stock market.
Investors are eyeing this project as it will strengthen the company’s transmission business in the long run. Although Tata Power shares witnessed both slight decline and stability in intraday trading, experts are considering it as a positive sign for long-term growth.
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