Power Grid Corporation had a target to spend INR550b in the 11th five year plan. It spent only INR60b in FY08 versus the plan to spend INR110b. In FY09, the company plans to spend INR80.4b, while the plan estimate was INR112b.
Had Power Grid spent INR550b from FY08-12, translating into an earnings growth of 20% for the next four years. Based on actual spends for the first two years of the plan it would be difficult for Power Grid to achieve the targeted capex spend of INR550b. Therefore FY08-12 capex assumptions for Power Grid is cut by 30% to INR385b.
Can the Indo-US Nuclear deal accelerate the spending in FY10 through FY12 ? Maybe if the new Govt in India gives additional thrust to the Power sector.