"We will have to do the capital restructuring of PowerGrid Corporation for enabling it to take up more projects and also to be a equity partner in the proposed Power Trading Corporation," Kumaramangalam said.

He said, the capital restructuring of PowerGrid would be done through fresh induction of funds so that it could even take up private transmission projects proposed under the mega power policy.

PowerGrid has targeted a massive Rs 13,000 crore investment during the Ninth Plan period and had sought power ministry's approval for capital restructuring either through converting its loans into equity or by infusion of fresh capital.

The total loans of the corporation from various multi-lateral lending agencies amount to about Rs 1,200 crore, which PowerGrid had sought to convert into equity, power ministry sources said.

They said,that multilateral lending agencies like World Bank, overseas economic cooperation fund of Japan and Asian Development Bank were not in favour of converting their loan into equity for the capital restructuring of PowerGrid.

PowerGrid sources said that they have sought fresh induction of capital to the tune of about Rs 5,000 crore so as to take up the transmission projects ranging between 1,000mw to 2,000mw under the mega power policy.

The projects proposed to be taken up by the corporation under the policy include the transmission projects at Pipava in Gujarat, Krishnapatnam in Andhra Pradesh, Cuddalore in Tamil Nadu and Hirma power project in Orissa, sources said.

To take up projects of such a huge magnitute PowerGrid needs to have capital restructuring and this would also take its Ninth Plan investment target to Rs 18,000 crore, they said adding the final approval for the same had to come from the finance ministry.

Earlier the finance ministry had rejected PowerGrid's proposal for capitalrestructuring stating there was no urgent need for the corporation to go for it as transmission projects were not open for private sector participation.

Ministry sources said, in the backdrop of the government allowing private sector participation in power transmission sector, the capital restructuring of PowerGrid was essential.

PowerGrid will have 30 per cent stake in the PTC and for infusion of funds in the trading company also the corporation would require huge funds which would be possible only through capital restructuring, they said.