India's Jai Corporation to Develop Three Power Plants of 6,200 MW in Maharashtra

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Researched by Industrial Info Resources (Sugar Land, Texas)--Urban real estate and infrastructure company Jai Corporation Limited (BSE:512237) (Mumbai) has announced plans to build three power plants with a combined generating capacity of 6,200 megawatts (MW) in Maharashtra. The power plants will be built through Jai's affiliate companies: Urban Energy Transmission Private Limited, Urban Energy Generation Private Limited (UEGPL), and Urban Energy Distribution Private Limited. UGEPL has been accorded the status of co-developer for the proposed projects.

Jai will develop a 2,000-MW plant at Dronagiri in the state. The power plant, which will be constructed in three phases, will be part of the proposed Navi Mumbai Special Economic Zone (NMSEZ). The state government of Maharashtra has issued letters of assistance to Jai to build two power plants of 2,100 MW each at Kondgaon Nagothane and Vangni Tarfe Taloja. These projects are part of Jai's strategy to integrate its urban infrastructure portfolio.

Jai is jointly developing and promoting two multi-product special economic zones in Mumbai and Navi Mumbai. These projects have been conceived as gateways to increase trade and commerce in the state. The 5,250-acre NMSEZ will be developed by City and Industrial Development Corporation of Maharashtra Limited (CIDCO) (Mumbai), Reliance Industries Limited (BSE:500325) (RIL) (Mumbai) and Jai. The Mumbai Special Economic Zone (MSEZ), which is being promoted by Jai and RIL, will be constructed on 12,500 acres of land. The NMSEZ and MSEZ will have convenient and easy access to rail, air and sea routes. These projects will consist of information technology, power, telecommunications, engineering and construction, and other resources. Jai is also exploring the feasibility of developing another special economic zone at Kopta in Maharashtra.

Jai holds a 10% equity stake in the RIL-promoted Rewas deepwater port project. Reliance Logistics Private Limited (Mumbai), a subsidiary of RIL, holds a 55% stake in the venture, while Maharashtra Maritime Board (MMB) (Mumbai) and Amma Lines Limited (Mumbai) hold stakes of 11% and 24%, respectively. Amma Lines is the original licensee for the Rewas project. The port will be constructed as part of a concession agreement with MMB. Requisite approvals and clearances have been obtained.

The Rewas port, which will be located 10 kilometers from the government-owned Jawaharlal Nehru Port in Maharashtra, has been heralded as one of India's most ambitious port development initiatives. The JNP is one of India's busiest terminals, handling more than 60% of the country's container cargo. Upon commencing operations in 2040, the port will consist of 70 berths that can handle about 457 million tons of general cargo, liquid and dry bulk. Presently, India has 12 government-controlled ports, with a total cargo-handling capacity of 567 million tons. The first phase of the port project, comprising 10 berths with an estimated $1.24 billion investment, was expected to start operations on a 50-year contract in 2010. However, land acquisition issues delayed the launch. Officials indicate that discussions are under way with the state government and that the issue will be resolved soon. In a related development, RIL has announced that it will offload 15% of its share in the Rewas port project to enable a fresh round of funding and bring in technology partners.

Jai, which was established in 1985, is also focusing on asset management and venture capital-based funding. The company's other interests include engineering, procurement and construction for highways, airports, bridges, and other urban infrastructure and manufacturing. The venture capital business has a total corpus fund of about $1.03 billion. According to company officials, the first fund will address the needs of the Indian real estate sector. A second scheme will provide opportunity for funds from the international market to be used in the country's real estate and infrastructure development.

Industry experts indicate that to sustain economic growth, India will require funds to the tune of $500 billion in the infrastructure sector. During 1999-2005, this sector saw private funding of only about $51 billion. Jai's new projects and business development strategy are expected to provide India with much-needed state-of-the-art infrastructure.

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