POWERLINKS TRANSMISSION LIMITED a joint venture of TATA POWER &POWERGRID

INDIA ELECTRICITY Plenary Session III - TRANSMISSION May 12, 2006 New Delhi Movie

BackgroundBackground To evacuate power from Tala Hydro-Electric Project in Bhutan and surplus power in East and North-East regions to facilitate creation of transmission highway to transfer power to the power starved Northern region. To evacuate power from Tala Hydro-Electric Project in Bhutan and surplus power in East and North-East regions to facilitate creation of transmission highway to transfer power to the power starved Northern region. Tala hydro-electric Plant being developed by GoI and GoB on the near Honka village (3 Kms. Downstream of existing Chukha Tail Race) Tala hydro-electric Plant being developed by GoI and GoB on the near Honka village (3 Kms. Downstream of existing Chukha Tail Race) Beneficiary states: Eastern and Northern Region states Beneficiary states: Eastern and Northern Region states The total transmission project is being developed by Powerlinks and PGCIL. The total transmission project is being developed by Powerlinks and PGCIL. To evacuate power from Tala Hydro-Electric Project in Bhutan and surplus power in East and North-East regions to facilitate creation of transmission highway to transfer power to the power starved Northern region. To evacuate power from Tala Hydro-Electric Project in Bhutan and surplus power in East and North-East regions to facilitate creation of transmission highway to transfer power to the power starved Northern region. Tala hydro-electric Plant being developed by GoI and GoB on the near Honka village (3 Kms. Downstream of existing Chukha Tail Race) Tala hydro-electric Plant being developed by GoI and GoB on the near Honka village (3 Kms. Downstream of existing Chukha Tail Race) Beneficiary states: Eastern and Northern Region states Beneficiary states: Eastern and Northern Region states The total transmission project is being developed by Powerlinks and PGCIL. The total transmission project is being developed by Powerlinks and PGCIL. River Wangchu River Wangchu

POWERLINKS Transmission Limited is executing India’s first private sector inter- state transmission project on BOOT basis POWERLINKS Transmission Limited is executing India’s first private sector inter- state transmission project on BOOT basis Set up as a 51:49% JV between Tata Power and POWERGRID Set up as a 51:49% JV between Tata Power and POWERGRID PGCIL to buy entire transmission capacity PGCIL to buy entire transmission capacity

Fast Track Project  TATA Power was selected as JV Partner – 22 nd OCT 2001  Original Schedule as per Feasibility Report- 42 Months  Agreements(Share Holders Agreement / Implementation Agreement / Transmission Services Agreement) signed--- 4 th JUL 2003 (for completing project in 36 Months)  Transmission License Received from CERC - 13 th Nov 2003  Loan Agreements signed with IDFC/SBI/IFC/ADB in Jan 2004

Fast Track Project---Cont’d  Financial Closure achieved in record time of 10 months (12 th May 2004)  All Major Orders (LOAs) awarded-Dec 03/Mar 04  Supplementary Agreements(Implementation Agreement and Transmission Services Agreement) signed after approval of CERC on 07/10/2004  Lahmeyer International appointed as Lender’s Independent Engineer.  ERP for F&A was implemented on 01 st Oct 2004  awarded – Sept 05 ISO 9001, ISO 9001, ISO 14001, ISO 14001, ISO ISO 18001

Transmission Route A1 A2 A3 A4 A MW 3000 MW LINE CAPACITY (A6)

Project Volumes : 1. Tower Steel:67500 MT (33400 MT-HT Steel) (34100 MT-MS Steel) 2. Reinforcement Steel:15500 MT 3. Concreting:1,80,000 CuM 4. Excavation:12,12,000 CuM 5. Total Circuit kms: Total Towers:3152 nos. 7. Total Conductor:22000 kms. 8. Total Insulator Strings24500 nos. (As per original B.Q.)

kV Siliguri – Purnea Line (Completed) (Completed) kV Purnea – Muzaffarpur (Completion expected : end May 2006) (Completion expected : end May 2006) kV Muzaffarpur – Gorakhpur (Completed) (Completed) kV Gorakhpur – Lucknow (Completed) (Completed) kV Bareilly - Mandaula (Energised-1 st May 2006) (Energised-1 st May 2006) kV Muzaffarpur – Muzaffarpur (Completed) (Completed) - 1 st July st April 2006 Agreed Commercial Operation Dates (CODs)

Cost Details Rs Crores – Original cost as approved by CCEA on 2 nd July, 2003 based on August, 2002 level Rs Crores – Project Cost based on August, 2002 level and considering the awarded price for Tower packages. This cost was considered by the Lenders for signing the Loan Agreements – This Revised Cost Has Been Approved By Govt. Of India Rs Crores

Cost Details Initial Project Cost is Generally Based On Walk-Over Survey Data (Line Length & Type Of Terrain, Major Crossing etc.) At FR Stage Cost is Calculated Based On Survey Data and Prevailing Budgetary Cost of Equipments / Services. Before Tendering,Cost is Updated Based On Preliminary Survey Data (Detail BOQ) and Escalation, If any

Cost Details – Final Completed Project Cost Final Completed Project Cost is Arrived At By : Initial Project Cost (FR Cost) Plus Escalation On Material Cost Plus Other Costs

Major Constituents of Transmission Line JV Projects Government Project Promoters Financiers

Government:- Policy & Regulatory Framework to Spell Out: Debt:Equity Ratio and Procedure For Approval Of Completed Project Cost Legal Framework to Deal With ‘Non Payment’ Of Dues Return On Equity Procedure For Getting Clearances From Other Departments Avoidance of multiple taxes Available tax incentives to be extended sufficiently in advance

Project Promoters Should assess all and business opportunities upfront Security mechanism towards transmission service payments ‘Risk Factors’

Financiers Financiers Must Evolve Simple and Clear-cut Instrument for Project Appraisal (Particularly For Transmission Project), Risk Mitigation (Particularly Insurance of TL Asset Against Loss Of Revenue/ Business) Simplification of documentation

Learnings from our experience 1. Pre Award Activities Scope for Improvement OKOK 1.2. Surveying 1.3. Estimation 1.4. Tendering & Award Placement 2. Post - Award Activities 2.1. Project Management 2.2. Engineering Activities

2.3. Field Activities Scope for Improvement OKOK Preparation of Ground Profile Tower Spotting Foundation Site Store Management Tower Erection : Technical : Safety : Safety Tower Erection : Technical : Safety : Safety Stringing : Technical : Safety : Safety Stringing : Technical : Safety : Safety Learnings from our experience

To sum up… This is the first transmission project in Private sector, which has already set precedence for other projects to follow. To make this project a big success, it is essential that all the concerned agencies including promoters, company, partner contractors & government regulatory body join hands in removing the obstacles for transmission sector to tread on a new path. This is the first transmission project in Private sector, which has already set precedence for other projects to follow. To make this project a big success, it is essential that all the concerned agencies including promoters, company, partner contractors & government regulatory body join hands in removing the obstacles for transmission sector to tread on a new path.

Thank You!