Wednesday, June 08, 2005

Reliance's Power Play

It has licences to sell power in Delhi, Bombay and a few other cities. It is the second largest player in the power sector in India, and distributes almost 6000 MW of power to consumers in several cities. However it only has a generating capacity of around 900 MW. Now Reliance Energy intends to change that.

Two realizations are behind this: Firstly the importance of a strong generation capacity to become a strong distribution player. Secondly, India with an installed power capacity of just over 100,000 MW, needs its capacity to multiply over the next few years and decades. And who is the big daddy of all big investments in the private sector in India? Thats right, the Ambanis of Reliance.

The company is building the largest gas-based plant in the world in Uttar Pradesh, at an estimated cost of Rs 11,000 crores, to produce 3,740 MW of power using gas from Reliance's KG Basin find.

A giant 12,000 MW coal-based plant is being planned in Orissa, at a cost of Rs 48,000 crores. Still at a conceptual stages, the plant will need 10% of the coal reserves in the region.

Still in the feasibility analysis stage is a 4000 MW gas-based project in power-starving Maharashtra. Not sure if this is part of the 12,000 MW worth of projects the state government recently sanctioned (and ran afoul of the center). But Maharashtra looks set for a power surplus situation in another few years if all the projects take off. Good.

Finally in high-hydro-potential Himachal Pradesh, Reliance is in a joint venture to set up a hydropower unit for Rs 750 crores.

Other major Indian corporates are setting up captive wind power plants, but given its background, Reliance remains unlikely to do so soon.