India's Reliance Power Securing Coal Imports for 4,000-Megawatt Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Reliance Power Limited (RPL) (Bombay) has won the bid for India's 4,000-megawatt (MW) Krishnapatnam ultra-mega power project in Andhra Pradesh. Coastal Andhra Power Limited, the special-purpose vehicle formed by the state-controlled Power Finance Corporation to handle bidding for the project, has issued RPL with a letter of intent. RPL, a member of the Reliance Energy group, has filed the draft prospectus for a $3 billion initial public offer (IPO) on the market. The Krishnapatnam project alone is estimated to require an investment of more than $4 billion. Andhra Pradesh will receive 1,600 MW of the plant's power supply and Maharashtra, Tamil Nadu and Karnataka will each take 800 MW.

The project will have feed of imported coal, and RPL is planning to invest $1 billion in coal blocks overseas. The project will require a coal feed of 15 million tons per annum (TPA) and an operating life of 25 years. Indonesia is thought to be the favored source, but RPL has also been considering Australia and South Africa as coal sources. If Indonesia gets the nod, the deal would follow Tata Power's $1.1 billion for a 30% stake in two coal resources owned by PT Bumi Resources. The shorter sea freight route from Indonesia will be a factor in the decision as thermal coal export prices currently are at record levels around $88 per ton from Newcastle in Australia and $95 per ton from South Africa's Richards Bay. India's coal imports, currently running at 33 million tons per annum (MTPA), are estimated to rise to 100 MTPA by 2015.

RPL won the bid with a price of 2.33 rupees (Rs) per unit of power with Larsen & Toubro and Sterlite Industries quoting Rs 2.63 per unit. This is the second ultra-mega project won by RPL. It has already been awarded the Sasan project in Madhya Pradesh, which will have a domestic coal feed.

For more information, view related articles:

•August 2, 2007 - Reliance Power Bags Sasan Power 4,000 MW Project

•October 16, 2007 - Bidding Pace Quickens for India's 'Mega' Projects

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