@harsh.beria93 few questions regarding powergrid and InvITs.
- When you say the contracts are TBCB, what is the metric on which the bidding happens? Is it cost charged per Circuit KM, or does even the amount of power transmitted also comes into play?
- With the introduction of InvIT structure, I am getting the feeling that slowly PowerGrid will become a EPC player of sorts operating on the BOT model, which sets-up the towers (builds), operates it for sometime and then transfers the towers to the InvIT. This way, isnt PowerGrid’s cashflows actually come under more stress say two three years down the line, when the towers and its profits are out of its balance sheet, and all the profits and cashflows are sitting with the InvIT
- Any idea on how the transfer of the tower assets happens between Powergrid and the InvIT, is it on book value or its like some discounted cashflows
From what I have gathered through the thread, it seems the InvIT might be a better instrument to buy due to the following:
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Assets are created, with contracts in place, so no execution risk
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Optionalities of possible other monetizations are with the InvIT (eg. putting telecom towers on the power towers and earning more income)
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No/limited downside vis-a-vis Powergrid, as it gets the experience of the Powergrid mgmt. with powergrid sorting all the setup related activities (eg. land-acquisition, getting the power agreements, bidding for it etc.)
Its like PowerGrid finds a golden goose, feeds its, sees it grow and then one day sell it off to some-one for money right now compared to golden egg coming in month-over-month like annuity.
It would be great if you can shed some light on the questions and also let me know if I am missing on . PowerGrid vs PowerGrid InvIT view
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