The Cabinet Committee on Economic Affairs has approved the proposal of Follow on Public Offer (FPO) of Power Grid Corporation of India Limited (PGCIL) of 78,70,53,309 equity shares of Rs. 10 each constituting 17 percent of existing paid-up capital which comprises fresh issue of 60,18,64,295 equity shares (13 percent of existing paid-up capital) and offer for sale (disinvestment) of 18,51,89,014 equity shares (4 percent of existing paid-up capital) by the selling shareholder that is the President of India.

Additional resources generated through the issue of the FPO will be utilized by PGCIL in its investment programmes.

Once the approval is received, action will be taken for implementation of the decision immediately in consonance with terms and conditions.

Background:

PGCIL, a Navratna Public Limited Company under the administrative control of the Ministry of Power, Government of India, started its commercial operation in the year 1992-93. PGCIL, the Central Transmission Utility (CTU), is engaged in power transmission business with the mandate for planning, co¬ordination, supervision and control over Inter-State transmission systems and operation of the National and Regional Power Grids. It is also in the telecom business and offers consultancy services.

At the end of Financial Year 2012-13, PGCIL owned and operated Extra High Voltage Transmission line network of about 1,00,100 circuit kilometers (ckms) and 168 substations with transformation capacity of more than 1,64,700 Mega Volt Amperes (MVA). PGCIL wheels about 50 percent of the total power generated in the country through its transmission network. The inter-regional power transfer capacity of National Grid is about 31,850 Mega Watt (MW) which is envisaged to be enhanced to 65,500 MW by the end of the XII Plan. The Capital Expenditure (CAPEX) in the XII Plan is expected to be approximately Rs 1.25 lakh crore after considering the investment for new initiatives. PGCIL is a highly leveraged company and the FPO will help in raising funds of the order of Rs 5,600 crore to meet its investment programme for the next two financial years and in meeting with the CERC allowed norms of 30 percent equity contributions to investment during FY 2013-14 & FY 2014-15.

Follow-on public offer approved for Power Grid to raise funds for capital expenditure and meet equity contribution norms. Approval of a Follow-on Public Offer for Power Grid Corporation authorizes issuance and sale of equity equal to 17 percent of existing paid-up capital, comprising a fresh issue to raise resources for capital expenditure and an offer for sale by the President of India. The proceeds will finance PGCIL's investment programme over the next two financial years and support compliance with regulated equity contribution norms; implementation will follow upon receipt of necessary approvals in accordance with terms and conditions.