Power Grid Corporation of India Ltd. makes a corporate announcement

For POWERGRID’s Barmer-II 6 GW HVDC project, the acquisition was completed on 23 September 2026. The filing identifies two explicit post-acquisition regulatory approvals as pending, while it does not disclose a project-specific commissioning date. ^[1]

Implication: the project has moved beyond the ownership/acquisition step, but the formal regulatory transition to execution still hinges principally on the CERC transmission licence and tariff-adoption orders. Environmental risk is more route-specific: there is no general EIA requirement, but forest/wildlife permissions could still matter if the final corridor intersects protected or forested areas. The 26–30-month period is a sector-wide implementation benchmark, not a stipulated Barmer-II completion date; therefore, a precise commissioning quarter cannot be established from the disclosed filing.

Assuming the project refers to the 6 GW Barmer-II–South Kalamb HVDC project, its tariff is a competitively discovered, fixed annual transmission charge rather than a cost-plus regulated tariff. POWERGRID quoted annual transmission charges of Rs 3,244.33 Crores under the TBCB route for the BOOT project; this figure is the project’s annual charge, not its construction cost or equity investment. ^[7]

Tariff comparison

• TBCB project: The tariff is discovered through an e-reverse auction, with the lowest bidder winning a 35-year transmission tariff adopted by the appropriate commission. The project therefore earns the bid tariff irrespective of whether POWERGRID subsequently delivers construction or operating efficiencies. ^[8]
• Existing RTM portfolio: Tariffs are determined through the CERC framework and recover Annual Fixed Cost, comprising RoE, interest on debt, depreciation, O&M expenses and interest on working capital. ^[9]
• Regulated RoE benchmark: Assets commissioned before 1 April 2024 retain 15.5% post-tax RoE. Assets commissioned from 1 April 2024 receive a 15% base RoE, grossed up for the effective tax rate to arrive at pre-tax RoE. ^[9]
• Economic difference: TBCB does not provide the same explicit cost-plus RoE protection. POWERGRID management indicated that TBCB projects typically target approximately 11–13% equity IRR, with upside possible if construction and operating efficiencies exceed the assumptions embedded in the bid. ^[10]

Consolidated RoE implication

The TBCB mix should create some downward pressure on POWERGRID’s consolidated RoE profile relative to its mature RTM assets, particularly as the company adds large, competitively priced projects and the equity base expands ahead of full earnings contribution. However, the effect should be gradual rather than an abrupt deterioration:

• New TBCB assets add long-duration, annuity-like cash flows and support asset-base growth, but their bid economics appear below the legacy RTM RoE benchmark.
• Execution savings, lower-than-assumed project costs and operational efficiencies can improve realised TBCB equity returns; management specifically highlighted this as the principal TBCB upside. ^[10]
• TBCB growth partly offsets the natural earnings moderation in mature RTM assets, where depreciation and outstanding debt decline over time, reducing depreciation and interest recovery. ^[11]
• POWERGRID’s consolidated FY26 RoE was 16.5%. ^[12] The medium-term implication is therefore best viewed as higher earnings and asset growth with a somewhat lower steady-state consolidated RoE, rather than preservation of the legacy regulated-asset RoE level.

The key uncertainty is project-level economics: the cited project’s construction cost, financing mix, tax assumptions and final equity requirement are not reported alongside the tariff. Consequently, its precise project RoE cannot be calculated from the disclosed annual charge alone.