MAJOR NEWS IN THE POWER SECTOR
October 1st to 15th 2007
TATA POWER
Adani to build world’s largest coal receiving terminal for Tatas
The Adani group is setting up world’s largest coal receiving terminal at Mundra for Tata Power Company. The terminal having 40 million tonne capacity will help Tatas import coal from Indonesia and other sourcing countries, and fire its 4,000MW UMPP being set up at Mundra. The terminal will have a discharge rte of 6,000 metric tonne per hour, and is being constructed just outside the SEZ owned and operated by the Adani group, and in the vicinity of the Adani-run Mundra Port.
(The Economic Times, Oct 15, 2007)
IFC to fund Mundra ultra mega power project
The private sector lending arm of the World bank, International Finance Corporation (IFC), has decided to fund the 4,000MW ultra mega power project to be developed by Tata Power at Mundra in Gujarat. The quantum of equity and debt to be provided by the IFC to Tata Power’s Mundra project would be determined after the negotiations. The project to be developed over seven to eight years was awarded to Tata Power on the basis of a tariff-based international competitive bidding by the power ministry. The government has decided to develop 10 ultra mega power projects through the private sector participation to meet the growing demand for power. These projects are expected to be commissioned during the 12th Five Year Plan (2012-17).
(Business Standard, Oct 12, 2007)
(Also appeared in Financial Express, Mint, The Financial World, The Times of India, Indian Express, The New Indian Express, Asian Age, The Political & Business Daily, The Tribune, Vijaya Karnataka, Daily Hindi Milap, Dainik Bhaskar, Sanmarg and Echo of India)
Bidding date for Krishnapatnam extended; REL Tatas in fray
Reliance Energy Ltd (REL), Tata Power and NTPC are among the 10 qualified bidders in fray for the 4,000MW Krishnapatnam ultra mega power plant (UMPP) in Andhra Pradesh, request for proposals (RFPs) for which will be accepted till October 24. After five postponements PFC has decided to accept the RFPs from the qualified bidders. Qualified bidders for the project comprise Tata Power, REL, NTPC, Essar, Sterlite, L&T, Torrent, AES, DS Construction and Sumitomo.
(The Financial Express, Oct 11, 2007)
Tata Power lines up Rs 6k crore for J’khand
Tata Power Company (TPC) will pump in around Rs 6,000-6,500 crore in the next 3 to 4 years for producing around 1,300MW. TPC’s growth in the state is linked to Tata Steel’s expansion plans. TPC managing director Prasad R Menon, who attended the groundbreaking ceremony of the company’s fifth 120MW thermal power unit, said the company’s sixth unit, also of 120MW, would be located inside the Tata Steel factory in the state. It would run on gases emitted by the steel major’s biggest 2.5 mtpa blast furnace, which is under construction. The fifth and sixth units, with 120MW capacity each, will cost TPC around Rs 1,080 crore. Currently, the power utility has a generating capacity of 427MW at Jojobera, which includes a 67MW plant, inherited from Tata Steel, and three other thermal units of 20MW each.
(Financial Express, Oct 11, 2007)
(Also appeared in Business Standard, The Times of India, Hindustan Times, DNA, Midday, Free Press Journal, The Political and Business Daily, Echo of India, Bharat Mitra,Vaartha)
Tata Power, REL in fray for 4,000MW AP project
After the controversial Sasan ultra mega power venture, the Krishnapatnam project in Andhra Pradesh is the next to go in for bidding. Tata Power, Reliance Energy Ltd (REL), National Thermal Power Corporation (NTPC), Essar Power, Jindal Steel & Power (JSP), Sterlite Industries, DS Construction and engineering firm Larsen & Tourbo (L&T) are in the fray for the 4,000MW ultra mega power project (UMPP).
(The Times of India, Oct 11, 2007)
(Also appeared in The Financial Express, The Indian Express, The New Indian Express, The Tribune, Echo of India)
TPC allots shares to FCCB holders
Tata Power Company has informed that the board of directors of the company allotted 8, 04,088 equity shares of Rs 10 each to holders of FCCBs. The company had received requests for conversion of 10,952 FCCBs into equity shares. In 1995, the company had issued 2 lakh FCCBs of $ 1,000 each aggregating $ 200 million, due on February 25, 2010 and convertible into equity shares. The bonds are convertible at any time on or before February 15, 2010 by the holders into equity shares of par value of Rs 10 each at a conversion price of Rs 590.85 per share at a fixed rate of exchange of Rs 43.38 per US dollar.
(Financial Express, Oct 09, 2007)
(Also appeared in The Political and Business Daily)
Tata Power
CMP: Rs 944.10
Target Price: Rs 1,198
HSBC Securities has maintained its ‘overweight’ rating on Tata Power, while raising its price target to Rs 1,198 from Rs 843 earlier. The HSBC note stated “We believe in Tata Power’s ability to expand its generation capacity over next five years. We now expect it to implement 10.3 GW by FY 2013 against our earlier estimate of 9.4 GW. The coal ministry has allocated coal mines in India to the company, which should reduce its fuel costs substantially. We expect the coal mines to be operational by the end of FY11 and hence we reduced our fuel cost estimates by 14% and 13% for FY12 and FY13”.
(The Economic Times, Oct 06, 2007)
(Also appeared in The Times of India, The New India Express, The Tribune and Sandesh)
COMPETITION/ CONSUMERS
« RELIANCE ENERGY LIMITED (REL)
RPL to become second largest generator: UBS
Global investment banking major UBS has said ADAG firm Reliance Power was well positioned to become country’s second largest power generator, valuing the firm between Rs 71,800 to 92,100 crore. With this valuation, RPL will also make it among the top five listed utilities by market cap in Asia.
(The Times of India, Oct 15, 2007)
(Also appeared in Mumbai Mirror)
Grey market abuzz over Reliance Power IPO
Grey market stock traders in Saurashtra and Kutch have started trading in shares of Reliance Power even before the company’s IPO is cleared by the regulator. Grey market premium for Reliance Power shares have been coming in from Rajkot and Jamnagar centres right after the day the company filed its Draft Red Herrings Prospectus (DRHP) with the securities and Exchange Board of India. As per the DRHP, Reliance Power would issue 130 crore shares of Rs 2 each at an appropriate premium to be fixed later.
(Hindustan Times, Oct 12, 2007)
Reliance Power to offload 10.1% stake via IPO
Reliance Power (RPL), will offload a 10.1% stake in the proposed initial public offering (IPO). According to the draft red herring prospectus (DRHP) filed by RPL with the stock market regulator Sebi, the IPO will comprise 130 crore equity shares of Rs 2 each for cash at a premium to be decided through a 100% book building process. The proceeds of the issue are proposed to be utilized for funding various projects.
(The Economic Times, Oct 04, 2007)
(Also appeared in The Business Standard, The Financial Express, The Hindu Business Line, The Times of India, Hindustan Times, The Indian Express, DNA, Asian Age and Statesman)
Rel Power IPO Gets Green Light
The Board of Reliance Energy, the parent company of Reliance Power, has cleared its initial share offer to raise up to $2.5 billion. Reliance Power will sell 10% to 15% stake in India’s largest ever IPO to fund its Rs 70,000 crore projects. If successful, the public offer will value the company at over $20 billion.
(The Economic Times, Oct 01, 2007)
(Also appeared in Business Standard, The Financial Express, The Hindu Business Line, Mint, The Times of India The Indian Express, Hindustan Times, DNA, Asian Age, Mid Day, Free Press Journal, The Hindu, The New Indian Express, Deccan Chronicle, The Tribune, Statesman, Pioneer, Dainik Jagran, Dainik Bhaskar, Divya Bhaskar, Lokmat, Sakal, Navbharat, Janmabhoomi, and Gujarat Samachar)
« MAHARASHTRA STATE ELECTRICITY BOARD (MSEB)
Maharashtra to be power surplus by 2010
Notwithstanding the efforts being made by the Maharashtra Government continues to reel under power shortage. Being a key component of the infrastructure needed to boost any economy; power shortage has been spreading ripples of concern in corporate and business circles in the State. Estimated to be reeling around a power shortage of at least 4,000MW, planners feel that the State, in the long run, will have to substantially augment supply to the burgeoning industries in Maharashtra. MSEB had recently said that augmentation of power would require an investment of over Rs 55,000 crore by 2009-10. This includes Rs 5,198 crore for generation, Rs 2,899 crore for transmission and Rs 7,332 crore for distribution apart from an estimated Rs 40,000 crore as additional investment for zero load shedding on all these fronts.
(Hindu Business Line, Oct 09, 2007)
« NATIONAL THERMAL POWER CORPORATION (NTPC)
NTPC in talks with overseas companies for green energy JV
In an effort to acquire expertise it doesn’t currently possess, India’s largest power generation company NTPC Ltd is in talks with foreign firms in the renewable energy business to sell around 40% of its stake in a proposed joint venture (JV) with multilateral lending agency, Asian Development Bank (ADB). NTPC will hold 40%, ADB, 20%, and the foreign companies will hold 40% in the venture that is part of an effort by the company and the government to reduce, if only marginally, the dependence of the country on fossil fuels such as coal and gas for power generation. The foreign companies are expected to share their expertise in the areas of wind, solar, geothermal and biomass energy generation.
(Mint, Oct 12, 2007)
Submits revised proposal for power exchange
The National Commodity & Derivatives (NCDEX) and National Thermal Power Corporation (NTPC) have submitted the revised power exchange proposal to the Central Electricity Regulatory Commission (CERC). The CERC had sought some clarifications on the proposal filed by the NCDEX – NTPC. The NCDEX officials are hopeful of getting the license soon, as the project has already received the government nod. PowerGrid Corporation, the National Stock Exchange, Tata Power, National Hydro Power Corporation and Power Finance Corporation are also partners in this venture.
(Business Standard, Oct 10, 2007)
NTPC claim to sites could derail TN mega power project plans
The Union government’s plan to accelerate approvals for a second ultra mega power project (UMPP) for Tamil Nadu, ruled by its ally, the Dravida Munetra Kazhagam (DMK), may come unstuck as NTPC Ltd, the largest power generating company and also a public sector undertaking (PSU), has claimed that the proposed sites under consideration had already been reserved for it. TN’s two plants were to be located in Cheyyur and Marakkanam. In a letter addressed to the power ministry, NTPC said the Cheyyur site was earlier identified by the PSU for setting up a power project, originally with a capacity of 2,000MW.
(Mint, Oct 08, 2007)
Railways asked to rush coal to 2 NTPC plants
The Railways has been asked to rush power-grade coal from whatever sources, no matter whether it is Eastern Coalfields Ltd (ECL) or Central Coalfields Ltd or North-Eastern Coalfields Ltd or any other coal company or imported stocks lying at haldia and Paradip ports, to National Thermal Power Corporation’s mega thermal power plants located at Farakka (West Bengal) and Kahalgaon (Bihar). The reason: the production at rajmahal mines, the captive mines of these two thermal power plants, has virtually collapsed with the result little coal is being transported by the merry-go-round systems. Worse, the pithead stocks too have been found to be substantially lower than what was earlier claimed.
(Hindu Business Line, Oct 05, 2007)
Rs 590 crore NTPC dividend
NTPC paid a dividend of Rs 590.37 crore to the government, making its total dividend for 2006-2007 Rs 2,638.56 crore – 32% of its paid-up capital. The shareholders of the company approved a final dividend of 8 per cent, amounting to Rs 659.64 crore, at the 31st annual general meeting. A cheque amounting to Rs 590.37 crore dividend for the government’s share was presented to Power Minister Sushilkumar Shinde by NTPC chairman and managing director T. Sankaralingam.
(Hindustan Times, Oct 01, 2007)
INDUSTRY
« STATE / GOVERNMENT/ REGULATOR / POLICY
Captive and merchant power plants too many get mega status
Fiscal sops and tax incentives may no longer be confined to stand-alone power projects. Captive and merchant power plants with a capacity of 1,000MW and more may also get to enjoy these concessions. The policy on mega power plants may be modified to make even captive and merchant plant status. The policy shift has been proposed by the power ministry in a Cabinet note. The mega power policy offers incentives such as complete waiver from Customs duty on equipment imports and a 10-year tax holiday to thermal power projects with a minimum capacity of 1,000MW and Hydel power projects of 500MW capacity. Captive and merchant are expected to play an important role in boosting the country’s power generation capacity.
(The Economic Times, Oct 11, 2007)
PFC to set up equity fund for power sector