Nov. 29 (Bloomberg) -- Sterlite Industries (India) Ltd., the nation's biggest copper producer, plans to sell a stake worth as much as $2 billion in its energy unit to build power plants, three people familiar with the matter said.

The group may sell 15 percent of Mumbai-based Sterlite Energy Ltd. to investors, said the people, asking not to be identified because the talks are private. The sale may raise between $1.5 billion and $2 billion, they said.

Prime Minister Manmohan Singh is doubling investments in power because shortages cause blackouts in most of India, curbing economic growth. The spending plan is luring investors to shares of Sterlite, controlled by billionaire Anil Agarwal's Vedanta Resources Plc, and Reliance Energy Ltd.

``These days big investments are being made to raise the nation's power generation capacity since it is imperative the nation add large quantities of power,'' said Jayesh Shroff, who holds Sterlite Industries shares among the $6 billion he helps manage at SBI Funds Management Pvt. in Mumbai. ``The power sector is the happening sector in India.''

Reliance Energy has more than tripled this year, the best performing stock on the benchmark Sensitive Index, and the group's Reliance Power Ltd. unit plans to sell shares for the first time.

Sterlite Industries rose 3.3 percent, or 29.25 rupees, to 919.1 rupees at the close of trading on the Bombay Stock Exchange. The stock is up 69 percent this year, valuing the company at $16.3 billion.

Share Sale

Sterlite Industries raised $1.75 billion to invest in power in June, driving a record year for stock sales by Indian companies.

The group said on Nov. 7 Sterlite Energy may sell shares or debt to expand its electricity generating capacity to 10,000 megawatts. Most of the projects would be completed in five years, it said in a statement to the Bombay Stock Exchange.

The group may consider an initial public offering of Sterlite Energy next year after the stake sale, the people said.

Dhanpal Jhaveri, spokesman at Vedanta, declined to comment. Vedanta, India's largest producer of copper and zinc, controls 68 percent of Sterlite Industries.

Sterlite Industries sold shares in the U.S. in June to fund a 2,400-megawatt power plant in the eastern state of Orissa, where the group is building a 500,000-ton aluminum smelter to meet rising global demand for metals.

Power Projects

India, which generates 128,182 megawatts of electricity, plans to set up eight large power projects, each generating more than 4,000 megawatts.

Power Grid Corp., India's main transmission company, sold shares this year to fund a more than doubling of the nation's network to 77,690 miles, long enough to circle the earth three times. The stock has gained 72 percent since the initial sale.

The government plans to spend 6.17 trillion rupees ($155 billion) by 2012 to boost generation and upgrade transmission and distribution networks, up from 2.89 trillion rupees in the past five years.

The finance ministry estimates a power shortage is responsible for cutting gross domestic production by a tenth.

Share sales by Indian companies almost doubled this year to 662 billion rupees, as a rally in the nation's stock market and accelerating economic growth lured investors.

To contact the reporter on this story: Debarati Roy in Mumbai at droy5@bloomberg.net; Cathy Chan in Hong Kong at kchan14@bloomberg.net.

Last Updated: November 29, 2007 06:39 EST