January 8, 2008
So what is Anil Ambani going to do with the Rs 10,000-odd crore he plans to raise via an initial public offering (IPO) of Reliance Power, a subsidiary that’s 51 per cent owned by Reliance Energy? Here’s a peek into this capacity-addition plans. The IPO will part-finance Reliance Power’s game plan for putting up 7,060 MW of capacity.
Though the company has taken up 13 power projects of 28,200 MW in capacity, the IPO funds will be used for only six projects. Company officials reveal that if the IPO goes as per plan, it should be able to mop up Rs 10,260 crore from investors, beating DLF’s Rs 9,200 crore (so far the largest capital-raising exercise by an Indian company).
Ambani’s blueprint, once implemented, will create one of the largest portfolios of power generation assets in the country. The elaborate programme is part of the government’s exercise to ensure “Power for All’’ by 2012. The company has taken up 13 projects, including two Ultra Mega Power Projects (UMPPs). The projects planned are either close to load centres or fuel sources.
The region-wise break-up of the capacity planned is as follows: western India (12,220 MW), northern India (9,080 MW), north-eastern India (2,900 MW) and southern India (4,000 MW). Seven projects (14,620 MW) will be coal-fired, two (10,280 MW) are to be gasfired and four (3,300 MW) are to be hydro. The company plans to sell the power from these projects under a combination of long-term and short-term power-purchase agreements (PPAs) to state-owned and private distribution companies and industrial consumers.
The National Electricity Plan has projected that demand for power will grow at an average annual rate of 9 per cent during the 11th Plan period (2007-12) and at an average annual rate of 7 per cent during the 12th Plan period (2012-17). Reliance Power has plans to develop additional projects in addition to the 28,200 MW in the pipeline, and explore overseas opportunities that are a strategic fit to its business.
— K.R. Balasubramanyam