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India's Tata Power Plans to Spend $15 Billion, Increase Capacity Eightfold
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 25,000 megawatts by 2017, Chairman Ratan Tata told shareholders at the annual general meeting in Mumbai today. A 4,000-megawatt, coal-based plant in Gujarat state is 60 percent complete and the 1,050 megawatt Maithon project in Jharkhand state is 85 percent 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 totaling 33,780 megawatts.
Tata Power shares gained 0.3 percent to 1,274.05 rupees in Mumbai trading. The stock has declined 8 percent this year compared with 7 percent increase in the benchmark Sensitive Index of the Bombay Stock Exchange.
Tata Power had 3,104 megawatts 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 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 300 megawatts by 2013, the company said July 7. This is part of India’s plan to increase the nation’s grid-connected solar capacity to 1,000 megawatts by 2013 and 20,000 megawatts by 2022 from 10 megawatts currently.
Wind Power
The company has 200 megawatts of operating wind-power capacity in Gujarat, Maharashtra and Karnataka states and has placed an order for 150 megawatts 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 3,368 megawatts of electricity generating capacity in the four months to July 31, missing the target of 7,302 megawatts for the period, according to the Central Electricity Authority’s website.
India seeks to add 78,700 megawatts of electricity- generating capacity in the five years ending March 2012 and another 100,000 megawatts 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 163,670 megawatts 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 4,000 megawatt capacity, that the government wants built to help reduce the shortage of electricity in the country.
The company expects 1,600 megawatts from Mundra to be added by March 2012 and 2,400 megawatts a year later, taking the utility’s total capacity to 8,242 megawatts, according to the presentation to analysts.
Reliance Power plans, which has generation assets of 1,000 megawatts, plans to add more than 3,000 megawatts by March 2012 and is building a total of 33,780 megawatts, Chief Executive Officer Jayarama Chalasani said Dec. 29, without giving a completion date. The company’s projects include three plants of 4,000 megawatts each.
NTPC, India’s biggest power producer, currently has 32,194 megawatts of capacity, including plants in joint ventures, and is targeting generation of 75,000 megawatts by March 2017.
To contact the reporters on this story: Hemal Savai in Mumbai at hsavai@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net.
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