Reliance Power Plans 28,000 Megawatts in India, Eyes Global Acquisitions

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Researched by Industrial Info Resources (Sugar Land, Texas)--As Reliance Power (RP) approaches its initial public offering of 260 million shares on the stock market in mid-January, the company is staying active on projects in India and worldwide. In India, RP plans to build 13 projects with an investment of $28 billion over the next seven years and to create generation capacity of 28,000 megawatts (MW). RP hopes to raise $2.64 billion with the issue.

Demand for electrical power in India is expected to grow at a rate of 8% during the period of the country's 11th five-year plan (2007-12) and by 9% during the 12th five-year plan (2012-17). Industrial consumption is on a steep upward curve, and 400 million people in the country do not have access to power. Lalit Jalan, a Director of RP, said the per-capita consumption of power in India is 600 units per annum, which is less than 25% of the world's average. Per-capita consumption is one-third of China's per-capita consumption of 1,684 units per annum. The low penetration offers RP tremendous opportunity, Lalit said.

The company is considering acquiring mines in Indonesia and Australia to supply the 4,000-MW Krishnapatnam project and is on the bidding short list for Singapore's Tuas Power with an estimated value of $2 billion. Temask Holdings hopes to sell two more power generation units by June 2009. Tuas Power has oil-fired plants with a capacity of 1,200 MW and gas-fired capacity of 1,470 MW. The other two companies are PowerSaya with 3,100 MW and Seneko with 3,300 MW. RP is bidding in competition with India's GMR Infrastructure and seven other power companies from Japan, Hong Kong, Malaysia, China and Spain.

RP is also considering the acquisition of the 2,144-MW Dabhol power project, which was shut down after being abandoned after Enron's collapse. The project is now expected to be running at full capacity by the end of 2008. A consortium operating as Ratnagiri Gas & Power made up of NTPC, GAIL and financial companies has revived the power station and are thought to be ready to recoup their investment by selling off all or part of the project.

RP is moving into equipment manufacturing in which the state's Bharat Heavy Electricals held a near monopoly until recently. Talks are proceeding with major international companies, and the outcome could be a joint venture or an arrangement for sourcing equipment. This activity will be housed in a separate company. All the power generation units, including future nuclear power plants, will come under RP.

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