India's CESC to Develop Thermal and Hydropower Projects by 2017, with $7.5 Billion Investment

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Researched by Industrial Info Resources (Sugar Land, Texas)--While announcing the third-quarter results of utility company CESC Limited (BSE:500084) (Kolkata, West Bengal), Vice Chairman Sanjiv Goenka said that the firm plans to invest $6.5 billion to $7.5 billion by the end of India's 12th five-year plan period, 2012-17, to enhance its power portfolio. Goenka said that the funds would be sourced largely through equity, debt and internal accruals. The investments would be utilized to increase the company's thermal power generation capacity by 5,000 megawatts (MW) and hydropower generation capacity by 1,000 MW. CESC is the flagship company of diversified industrial conglomerate RPG Enterprises (Mumbai).

CESC owns and operates four thermal power plants with a combined generating capacity of 975 MW. The company supplies power across an area of 567 square kilometers, covering Kolkata and its neighboring Howrah region. According to Goenka, the company's power generation capacity is expected to increase by about 6,750 MW in 2017. The 250-MW Budge Budge III thermal power unit is scheduled to be commissioned very soon. A contract to set up a 140-MW hydropower project at Lara Sunta in Himachal Pradesh was recently secured by the company. The project has been estimated to require an investment outlay of about $151 million.

In August 2009, CESC acquired a 51% stake in Dhariwal Infrastructure Private Limited (DIL) (Kolkata, West Bengal), which will set up a 600-MW thermal power unit at Chandrapur in Maharashtra. At the time of the acquisition, DIL already had acquired about 450 acres of land for the project, which was estimated to require an investment of about $605 million. Funds for the project were to be raised in a debt-to-equity ratio of 70:30. Coal linkage for the plant has been awarded by South Eastern Coalfields (Bilaspur, Chhattisgarh), a subsidiary of India's state-owned coal producing company, Coal India Limited (CIL) (Kolkata, West Bengal). Environmental clearance is expected very soon. Goenka said that CESC was in talks with two China-based companies for supply of equipment. The project is expected to be completed in 2012.

Goenka said that the contract for its 600-MW Haldia power project in West Bengal is expected to be awarded to a Chinese company in February. The name of the company has not been disclosed. The Haldia project is also scheduled for completion in 2012.

The company has four thermal power projects scheduled for commissioning in 2013. These are the 1,000-MW Dumka project in Jharkhand, the 1,400-MW Haldia Phase II project, the 1,000-MW Dhenkanal project in Orissa, and the 2,000-MW Pirpainti project in Bihar. The capacity of the Budge Budge project is slated to increase to 750 MW in future.

Goenka added that CESC was exploring the possibility of developing coal blocks in Australia, Indonesia and Mozambique.

In a bid to diversify its power generation resources, CESC intends to spend more than $324 million over the next six years and enter the hydropower sector. The company is studying four project proposals, one of which is to be implemented in Bhutan. The others are likely to be set up in Himachal Pradesh and the northeastern states. CESC is likely to purchase some licenses that are for sale.

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