RIL expected to bid for upcoming mega power plant in Chhattisgarh and Orissa

Reliance Industries, India’s biggest company by market value, plans to build at least one power plant in the country marking the oil company’s entry into commercial electricity generation, two company officials said.

The Mumbai-based refiner and energy explorer is considering bidding for a 4,000-megawatt coal-fired plant in eastern India that may cost as much as Rs 16,000 crore ($3.4 billion ), according to officials briefed on the plan, who declined to be identified before a decision is taken. One megawatt is enough to power about 200 middle-class homes in India.

India’s government has invited bids for a 4,000-mw project in Chhattisgarh by July 5 and another in adjoining Orissa by July 30. Reliance may seek to build the Chhattisgarh plant, one of the officials said on Wednesday. A company spokesman didn’t reply to an e-mail seeking comments.

Reliance’s plan to start power generation follows a June 11 decision to buy a wireless Internet services company for $1 billion as it seeks to expand beyond refining oil, making chemicals and natural gas production. The diversification became possible after billionaire chairman Mukesh Ambani ended a non-compete agreement with his brother Anil Ambani on May 23.

“Power is a natural area of diversification for Reliance after the no-compete agreement ended,” said Apurva Shah, head of research at Prabhudas Lilladher, Mumbai. “They have the skills to execute large projects and the money to fund it.”

The operator of the world’s biggest refining complex and India’s largest natural gas field had outstanding debt of about Rs 62,500 crore ($13.4 billion) and cash and equivalents of Rs 21,870 crore as of March 31, the company said in April. Reliance is in talks with banks to borrow $1 billion, two people with direct knowledge of the matter said on June 4.

The world’s richest brothers split India’s second-biggest business empire five years ago after their father died in 2002 without leaving a will and squabbled as their business interests collided . Under the 2005 agreement, Mukesh, 53, kept the petrochemicals, oil and gas units and Anil, 50, got the power, financial services, telecommunications, and entertainment units.

Reliance Power, a company run by Anil Ambani won three of India’s four so called ultramega-power projects, of 4,000mw each, auctioned by the government so far. The government plans to bar companies from bidding to build more than three such power plants at a time to ensure their timely completion, HS Brahma, then power secretary, had stated on January 15. The government proposes to build nine such plants to help almost double the country’s installed generation capacity in the next seven years.

Reliance Industries fell 0.8% to close at Rs 1,057.95 in Mumbai trading, its first decline in six days. The shares have lost 1.3% in the past year compared with a 17% increase in the benchmark Sensitive Index of BSE.

Source:http://economictimes.indiatimes.com/news/news-by-industry/energy/power/RIL-likely-to-bid-for-mega-power-plant/articleshow/6057239.cms

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