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Singapore firm to invest Rs.1,100 cr in Andhra power plant
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SME Times News Bureau | 26 May, 2010
In the first major foreign direct investment in India's power sector in over four years, Singapore-based energy, water and marine group Sembcorp Industries Tuesday signed a joint venture agreement to set up a 1,320 MW power plant in Andhra Pradesh.
Sembcorp Utilities, a wholly-owned subsidiary of Sembcorp, will hold 49 percent in the venture, Thermal Powertech Corporation India Limited (TPCIL). The remaining 51 percent will be held by Gayatri Energy Ventures Private Limited (GEVL), a subsidiary of Gayatri Projects Limited.
Sembcorp will invest Rs.1,100 crore in the Rs.6,869-crore supercritical technology-based plant at Krishnapatnam in coastal Nellore district.
The two companies signed the agreement in the presence of Power Minister Sushil Kumar Shinde and Andhra Pradesh Chief Minister K. Rosaiah.
Gayatri Projects Managing Director T.V. Sandeep Reddy said the first phase of 1,320 MW would be completed in 40 months while the work for the second phase of another 1,320 MW would begin in a year.
He said the financial closure for the project was expected to be completed by mid-June. He said 75 percent of the project cost (Rs.5,151 crore) is expected to be funded through debt financing and the remaining 25 percent (Rs.1,718 crore) through shareholders' equity.
Reddy said no decision has been taken to have Sembcorp as the partner for the second phase. The boards of the two companies will take a decision. The entire project of 2,640 MW is expected to be completed in five years.
The plant will be operated and maintained by O&M company, which will be 70 percent owned by Sembcorp and 30 percent owned by GEVL. The two companies signed a separate joint venture agreement for the same.
The plant is expected to begin full commercial operation of its two 660 MW units by the end of 2013. Coal India will supply 70 percent of the coal from its mine in Orissa while 30 percent will be sourced from overseas.
"This project is a major strategic milestone for Sembcorp and marks Sembcorp's entry into the fast-growing Indian energy market," said Sembcorp Group president Tang Kin Fei.
He told reporters that sembcorp would look at such business opportunities in other parts of India "if they fit into our core capabilities".
Sembcorp has power plants in Singapor, Britain, Vietnam, China, the UAE and Oman.
This is the second major investment for Sembcorp in Andhra Pradesh. In November last year, Sembcorp Marine, a subsidiary of Sembcorp, and Kakinada Seaports Limited had formed a joint venture in the coastal town of Kakinada to establish and operate a marine and offshore facility catering to offshore drilling units and merchant vessels trading or operating in Indian waters.
Sembcorp Industries has assets of over Singapore $9 billion.
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