India's CESC Planning Five-Fold Capacity Expansion With $4.6 Billion Investment

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Researched by Industrial Info Resources (Sugar Land, Texas)--CESC Limited (BSE:500084) (Kolkata, West Bengal), the power utility of RPG Enterprises (Mumbai), is planning to invest about $4.6 billion to augment its power generation capacity from the present output of 1,000 megawatts (MW) to 5,000 MW in a phased manner. Capacity expansion operations have been considered across CESC's ventures in Orissa, Jharkhand, Haldia, and Bihar, where 4,000-5,000 MW of greenfield power generation capacities are being set up. The projects are at different stages of completion.

Land acquisition for the first phase of the 2,000-MW thermal power plant in Haldia is almost complete, with 280 acres of the required 320 acres of land being secured. The first phase of the project will consist of two 300-MW units. However, financial closure for the project is expected to be completed only after the acquisition of the remaining 40 acres of land. When fully operational, the facility will have a total capacity of 2,000 MW, with the additional power generating units to be set up in the second and third phases of the project. Although the company has already identified the engineering, procurement and construction (EPC) contractor and financier for the project, further tasks have been held up because of the delay in financial closure.

On the other hand, CESC's proposed 1,000-MW thermal power venture in Orissa has made good headway. The company recently submitted an application for coal linkage for the project and also hopes to secure 1,200 acres of land required for the venture. The plant is slated to come up in Neulapoi, located in the Dhenkanal district in Orissa.

Although the company has not made much progress on the 2,000-MW project planned in Pir Painti in the Godda district of Bihar, CESC is planning to set up another 2,000-MW plant in Bhagalpur in the state. CESC is expected to shortly initiate the land acquisition exercise for the venture, while it awaits the necessary coal-linkages from the central government. Another 1,000-MW project planned for Dumka in Jharkhand, however, has yet to take off after delays in land allotment.

The $249 million third unit of the Budge thermal power station, located in the vicinity of Kolkata, is scheduled to go on stream by September 2009. Synchronization tests for the 250-MW unit have already been completed. Construction is under way on 280 of the 300 towers that comprise the network. Work on the remaining towers and an 85-kilometer power evacuation link have run into some land related issues, which are expected to be sorted out on time. Despite the capacity addition at Budge, the city of Kolkata is still expected to experience a shortfall of about 100-150 MW until the Haldia plant becomes operational.

With the capacity expansions in place, CESC's plans to trade off-peak excess power generated at these ventures in addition to 350 million to 400 million kilowatt-hours of off-peak surplus power generated from CESC's existing projects. The surplus power is expected to be supplied mainly to the power-starved states in the western and northern regions of the country. However, the state government of Jharkhand has iterated that private players will be permitted to engage in power trading only after the state has achieved self-sufficiency. In order to tap into the country's growing power market, the parent RPG Group established an independent power trading entity, RPG Power Trading (Kolkata, West Bengal), only last year.

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