India's Reliance Power to Double Capacity of Rosa Power Project with Double Investment

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's Reliance Power Limited (BSE:532939) (R-Power) (Navi Mumbai, Maharashtra), the power arm of the diversified Anil Dhirubhai Ambani Group (ADAG) (Mumbai), has announced plans to invest an additional $1.33 billion and double the planned capacity of its Rosa Power Project from 1,200 megawatts (MW) to 2,400 MW. The project site is at Rosa Village in Shahjahanpur, Uttar Pradesh, and the second 600-MW phase of the project is under development. Both phases of the project are based on sub-critical Pulverized Coal Combustion (PCC) technology.

"The idea is to optimize the land that R-Power already possesses in Rosa," a company executive said. "It was originally meant to be a 600-MW project, was scaled up to 1,200 MW, and now we are looking to increase capacity further by acquiring a little more land." R-Power owns about 600 hectares of land at Rosa.

The first 600-MW unit of the project is already operational and is the first power project of R-Power. Shanghai Electric Power Company Limited (SHA:600021) (SEC) (Shanghai, China) supplied Rosa Phase I with the required boiler, turbine and generator (BTG) sets. R-Power has a long-term coal supply agreement with Central Coalfields Limited (CCL) (Ranchi, Jharkhand), a subsidiary of Coal India Limited (CIL) (Kolkata, West Bengal). CCL has been sourcing coal for the project from the Ashoke coal mine in the North Karanpura Block of Jharkhand.

For Phase I, R-Power already has signed a power purchase agreement (PPA) with the Uttar Pradesh Power Corporation Limited (UPPCL) (Lucknow, Uttar Pradesh) on a cost-plus tariff that is based on the tariff guidelines outlined by the Uttar Pradesh Electricity Regulatory Commission (UPERC) (Lucknow). The two 300-MW units are grid-connected and already supply the state with power. The units were commissioned ahead of schedule in December 2009 and June 2010, respectively.

According to the current project schedule, the second 600-MW phase is expected to begin operations by March 2012, but during a recent visit to the plant site, Chairman and Managing Director Anil Dhirubhai Ambani implied the possibility of fast-tracking the project and beginning operations by late 2011. SEC once again will be supplying the project with the BTG sets. A long-term coal supply agreement has been signed with CCL for Phase II as well.

R-Power is funding Phase II of the project through a debt-equity ratio of 80:20. Financial closure for the second 600-MW unit was achieved in July 2009. Of the estimated project cost of $599 million, about $443 million will be lent by a consortium of domestic banks led by the Industrial Development Bank of India Limited (Mumbai). The company will supply 50% of the power generated to UPPCL and sell the other half through ADAG's power-trading entity, Reliance Energy Trading Limited.

Rosa Power Supply Company Limited was first floated in 1994 as a subsidiary of the Aditya Birla Power Company Limited (Mumbai), until it was transferred to R-Power in November 2006 as part of a share-purchase agreement between the two companies. Rosa Power Project is the first independent power project operating in northern India and, on completion, will increase the state's power supply by about 20%.

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