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RIL power foray could involve $15-bn-plus investments

business Updated: Jun 21, 2010 02:58 IST
Anupama Airy
Anupama Airy
Hindustan Times
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Mukesh Ambani-led Reliance Industries Ltd (RIL) may invest anywhere between $15 and 20 billion (Rs 70,000- Rs 90,000 crore) over the next 10 years towards its big-bang foray into the power sector, which, besides power generation, would also include transmission projects.

The funding for RIL’s power business will be through a mix of debt and equity and a new company may be floated in the next two years to undertake execution of power projects, a source close to RIL told Hindustan Times.

Sources also said since construction of a new power project takes up to five years, RIL, besides bidding for ultra mega power projects (UMPPs), may preferably look at inorganic growth (by acquisition of power plants) to establish its presence in the sector.

“RIL may look at acquiring some hydel and thermal power projects besides bidding for coal based UMPPs of 4,000 mw capacity each,” said the source.

UMPPs at Chhattisgarh, Orissa and Tamil Nadu — each of which would cost Rs 16,000 crore — is already on the investment radar of RIL.

“Setting up a power project does not need any licence but takes at least a year or two for preparatory work and another 3-4 years for its execution,” said a power ministry official, who did not wish to be identified.

“There are quiet a few projects (both thermal and hydel) where preparatory works have been done including firming up of coal linkages which developers may sell for a good premium,” he said when asked about availability of power projects for acquisition.

RIL will also bid for transmission projects as the space has been offered for participation by the private sector.

RIL spokesperson refused any official comments.

Given the scarcity of coal in the country, sources said RIL is also considering acquisition of coal mines in Australia, Mozambique, Indonesia and South Africa. RIL already has a MoU with a local company in Australia for mining uranium.

Even brother Anil — who has big plans to develop 33,000 mw power generation capacity with an estimated investment of over Rs 1 lakh crore — had acquired the Rosa power project in 2006.

RIL’s entry in the power sector was termed as a “game changing development” by its chairman and managing director, Mukesh Ambani at the company’s AGM on Friday.

Reliance Power has commissioned 600 mw capacity at Rosa and plans to add another 600 mw in the next phase.

In addition, Anil’s Reliance Power has so far bagged three out of the four ultra mega power projects (coal based) announced so far by the government. No developer at a given point of time can undertake execution of more than three UMPPs.