Wednesday, 15 September 2010

India's Tata Power Plans to Spend $15 Billion, Increase Capacity Eightfold
Sep 8, 2010

Tata Power Co., the generating unit of India's biggest industrial group, plans to spend 700 billion rupees ($15 billion) to increase capacity more than eightfold as faster economic growth boosts demand for electricity. The utility plans to generate 25,000MWs by 2017. Chairman Ratan Tata Power told shareholders at the annual general meeting in Mumbai today. A 4,000-MW, coal-based plant in Gujarat state is 60% complete and the 1,050MW Maithon project in Jharkhand state is 85% ready, he said.

"It looks to be too ambitious a plan", said D.K. Aggarwal, chairman of SMC Wealth Management Services Ltd, in New Delhi. "Tying up such funds may be a concern because it will require a lot of debt in only a short span of seven years". Private companies are competing with state-owned NTPC Ltd, to set up power plants as India seeks to add electricity generating capacity to help reduce blackouts in Asia's second fastest growing economy. Billionaire Anil Ambani's Reliance Power Ltd, plans to build projects totalling 33,780MWs.

Tata Power shares gained 0.3% to 1,274.05 rupees in Mumbai trading. The stock has declined 8% this year compared with 7% increase in the benchmark Sensitive Index of the Bombay Stock Exchange. Tata Power had 3,104MWs of generation capacity as of March 31, according to a presentation made to analysts in March. The utility plans to expand its wind and hydro power capacity and is exploring opportunities in geothermal energy.

Nuclear Plants
The company based in Mumbai wants to participate in building nuclear power plants in India. Tata Power said. Private participation in nuclear generation appears unlikely in the next five to seven years. Tata Power said in the presentation to analysts. India's upper house of parliament approved a bill on nuclear accidents Aug. 30 with tougher provisions for making suppliers accountable for defective equipment and capping damages payable by plant operators. The Civil Liability for Nuclear Damage Bill gives reactor operators the right to seek damages from companies providing defective or sub-standard technology.

Tata Power plans to set up solar facilities with a capacity of 300MWs by 2013, the company said July 7. This is part of India's plan to increase the nation's grid-connected solar capacity to 1,000MWs by 2013 and 20,000MWs by 2022 from 10MWs currently.

Wind Power
The company has 200MWs of operating wind-power capacity in Gujarat. Maharashtra and Karnataka states and has placed an order for 150MWs of additional capacity to be set up in Maharashtra and Tamil Nadu, according to an Aug. 12 statement. India's economy grew at the fastest pace in 2 1/2 years in the three months ended June 30, increasing demand for power. Utilities in the country added 3,368MWs of electricity generating capacity in the four months to July 31, missing the target of 7,302MWs for the period, according to the Central Electricity Authority's website.

India seeks to add 78,700MWs of electricity-generating capacity in the five years ending March 2012 and another 100,000MWs in the following five years to help reduce blackouts. "There is a big gap in power and whoever fills that gap first benefits", said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. The country's generation capacity was 163,670MWs as of July 31, according to the website of the Central Electricity Authority.

Mundra Capacity
The $4.2 billion Mundra plant in Gujarat is one of the ultra mega power projects, each of 4,000MW capacity, that the government wants built to help reduce the shortage of electricity in the country. The company expects 1,600MWs from Mundra to be added by March 2012 and 2,400MWs a year later, taking the utility's total capacity to 8,242MWs, according to the presentation to analysts.

Reliance Power plans, which has generation assets of 1,000MWs, plans to add more than 3,000MWs by March 2012 and is building a total of 33,780MWs. Chief Executive Officer Jayarama Chalasani said Dec. 29, without giving a completion date. The company's projects include three plants of 4,000MWs each. NTPC. India's biggest power producer, currently has 32,194MWs of capacity, including plants in joint ventures, and is targeting generation of 75,000MWs by March 2017.