Mundra Port and SEZ to See Fresh Round of Investment as Mundra UMPP Set for Early Commissioning

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Researched by Industrial Info Resources (Sugar Land, Texas)--Promoted by the diversified Adani Group (Ahmedabad, Gujarat), India's 15,808-acre Mundra Port and Special Economic Zone Limited (BSE:532921) (MPSEZ) (Ahmedabad, Gujarat) is the country's largest private port and the first multi-product SEZ to be based on a port. The industrial clusters at the SEZ include auto and auto ancillaries; chemicals and pharmaceuticals; food and agriculture; engineering; metals and minerals; stone and minerals; timber and furniture; and trading and warehousing.

MPSEZ is expected to see about $660 million in new investments from 21 companies that have committed to set up projects and are conducting feasibility studies. Alstom Bharat Forge Power, the joint venture between Alstom S.A. (EPA:ALO) (Levallois-Perret, France) and Bharat Forge Limited (BSE:500493) (BFL) (Pune, Maharashtra), plans to invest $286 million and set up a turbine and manufacturing unit at the SEZ. Kalyani Alstom Power, another joint venture formed by Alstom S.A. and BFL's parent company, the Kalyani Group, plan to invest $99 million to set up a heat exchanger and condenser production unit at the SEZ.

To meet the growing demand of the port, MPSEZ plans to invest about $25 million and double the 57-kilometer private railway line running between Mundra and Adipur in Gujarat's Kutch district. The railway line will be commissioned in two phases, the first by June 2011 and the second by the end of fiscal 2011-12. In 2009-10, MPSEZ handled more than 40 million tons of cargo at Mundra, and almost 11 million tons of that was transported by rail. With the new railway line in place, the cargo-handling capacity of MPSEZ from Mundra alone is expected to reach 100 million tons by 2012-13. The company is also setting up additional terminals at Hazira and Dahej in Gujarat, and at Marmugaon in Goa. The additional terminals are expected to raise the company's cargo-handling capacity to 200 million tons.

Adani Power Limited (BSE:533096) (APL) (Ahmedabad, Gujarat), a subsidiary of the multi-pronged Adani Enterprises Limited (BSE:512599) (Ahmedabad), plans to invest $3.1 billion to set up a 2,000-MW, gas-based power plant and a 10 million-ton-per-year liquefied natural gas (LNG) terminal at Mundra in Gujarat. Both projects have obtained clearance and are slated to be developed across 336 acres of land at Mundra. The LNG terminal will be set up by the Adani Group, with an initial handling capacity of 5 million tons per year, while APL will implement the power project. Earlier this year, the Adani Group had formed a joint venture with natural gas company Gujarat State Petronet Limited (BSE:532702) (Gandhinagar, Gujarat) to implement the LNG terminal project, but the venture did not take off. The Adani Group will now implement the project alone. The LNG terminal is expected to meet the needs of the industrial belt in Gujarat's Kutch region, the business units in MPSEZ, and the company's compressed natural gas and pressurized natural gas customers in northwestern India.

"The foray by Adani in LNG terminal has synergy with its gas and power business," according to industry analysts. "Mundra port has one of the deepest drafts and will be in a position to get large parcels of LNG from gas surplus areas in the Middle East." Given that the government's plans to import gas from Iran by pipeline have not been implemented so far because of various political and economic reasons, the economic feasibility of the LNG terminal is high.

The new power project will be APL's first gas-based power project. The company's ongoing and future projects have been coal-based so far. It is setting up the four-phase, 4,620-MW Mundra thermal power station, and its subsidiary Adani Power Maharashtra Limited (APML) is setting up the two-phase, 1,980-MW thermal power project at Tiroda, in the Gondia district of Maharashtra. The company's future projects include a 1,980-MW power project at Dahej in Gujarat, and a 1,320-MW power project at Kawai in Rajasthan.

Meanwhile, the 4,000-MW ultra-mega-power project being set up at Mundra by Tata Power Company Limited (BSE:500400) (Mumbai) is likely to be commissioned six to 12 months ahead of the scheduled commissioning date of September 2011. The project is developing at a fast pace, and the first 800-MW unit is likely to be commissioned early. The Mundra UMPP will be India's first power plant to utilize new supercritical boiler technology.

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