Wed, 01 Jun 2011 09:43:50 GMT

IL&FS power arm readies plan for 1,500-mw projects

Infrastructure Leasing and Financial Services (IL&FS) is known for being a leading financer of infrastructure ventures across the country. But now it wants to compete with the Tata Group, Adani and Lanco as a power generator. It is also getting ready to unveil its plans that rival many private power developers. In the next five to six years, IL&FS Energy Development Company (IEDCL) — the power arm of IL&FS — is working on setting up as much as 15,000 megawatt (Mw) of capacity.

"We have already prepared the groundwork for projects for a capacity of 4,500 Mw, like securing approvals and raising funds for the same. We also plan to finish the ground work of at least 5,000-Mw capacity in the next few years," said Ramesh C Bawa, managing director of IL&FS Financial Services, an arm of IL&FS.

IEDCL has two projects which are in advanced stages of implementation -- a 726-Mw natural gas-based project in Tripura in a joint venture with ONGC, and a 3,600-Mw project in Cuddalore, Tamil Nadu.

The total cost of the Tamil Nadu plant is Rs 15,000 crore, and has already achieved financial closure. It is all set to begin construction this month and the first unit will be commissioned in the next 18 months. IL&FS has also bought a coal mine in Indonesia at a cost of $160 million to source feedstock for this plant, which is based on imported coal.

In the long run, IL&FS plans list the power portfolio arm, in the same manner as IL&FS Transport Networks (ITNL), which is the holding company of its road and metro projects. The company would look at hitting the public market after having enough assets on the ground.

IL&FS, which boasts of decades of experience and expertise in preparing bankable infrastructure projects, has a business plan to monetise its power assets. Being a financial investor at the core, it is looking at raising money by selling stakes in the Cuddalore power project. "The idea is to develop the project to a certain level and then get in an investor into the project so that we can command a premium," said Bawa. Though the stake which would be off-loaded would depend on the valuation it commands, IL&FS said it would like to retain a majority stake in the project, as much as 51 per cent. "In no case, we would like our stake to go below 26 per cent," he said.

More projects are in the pipeline as joint ventures. It is working on two power projects in association with Andhra Pradesh Power Generation Corporation. One of them is a 2,100-Mw power plant in Karimnagar, to be executed in two phases. The government has already given an in-principle nod for it to use re-gassified LNG as fuel for the first phase. The second project is a 1,600-Mw coal-based power project in Krishnapatnam.

It is also working on three power projects based on non-conventional energy like a 45-Mw hydro project in Tipang, a 24-Mw hydro project in Passo-Dissing and 80-Mw bagasse-based co-generation projects in Maharashtra.

Source: Business Standard

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