GMR looks to Turkey’s power sector to gain edge in Europe

GMR looks to Turkey’s power sector to gain edge in Europe
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First Published: Sun, Jul 06 2008. 11 01 PM IST
Updated: Sun, Jul 06 2008. 11 01 PM IST
Hyderabad: After agreeing to buy a 50% stake in the Netherlands-based electricity producer InterGen for $1.1 billion (Rs4,753 crore) last week, India’s infrastructure organization GMR Group is eyeing the Turkish market to increase its power footprint, a senior company official said.
Turkey is pushing power sector reforms and has invited bids for two of its key power distribution networks of Ankara and Sakarya, the first of 20 planned electricity grid sales.
“The power sector in Turkey is being thrown open to private players and we are keenly looking at expanding our power footprint in this country,” said Raaj Kumar, chief executive officer of GMR Energy Ltd, an arm of the GMR Group.
He said the group already has a strong presence in Turkey after winning a consortium bid to develop Istanbul’s second airport—Sabiha Gokcen International Airport—by offering to pay the government a licence fee of $2.7 billion.
GMR Infrastructure Ltd has partnered with the Turkish construction company Limak Insaat Sanavi San Ve Tic AS and Malaysia Airports Holdings Bhd for the Sabiha airport.
“We have already established strong relations with the Turkish infrastructure companies and plan to enter the Turkish power sector both by setting up greenfield projects and acquiring existing power projects,” said Kumar.
Analysts say the move makes strategic sense. Arvind Mahajan, executive director of KPMG Advisory Pvt. Ltd, said, “With the InterGen acquisition and its presence in second airport in Turkey, the group is positioning itself to become a global energy and infrastructure player. The entry into the Turkish market for power will help it enter in one of the fastest growing power markets in Europe, while potentially leveraging some of the relationships and partnerships based on the airport bid.”
The InterGen stake, has given GMR Energy access to 12 functioning power plants in the UK, the Netherlands, Mexico, Australia and the Philippines with a total installed capacity of around 13,000MW.
Few power markets are as attractive in terms of demand growth potential as India and China, said K. Shankar, senior analyst with equity research firm Edelweiss Securities Ltd. “However, expanding generation capacity has been a slow- moving process and GMR is pursuing global opportunities to fast forward its entry into power sector. The strategy seems to be to gain toehold in diverse power markets by acquiring power generation assets available for sale at ... attractive prices,” he said.
In India, the GMR Group has around 4,000MW of projects that include around 800MW of operating capacity. “The acquisition of foreign power assets and setting up of greenfield projects globally is part of our strategy to attain at least 12,000MW of capacity by 2011-12,” said Kumar.
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First Published: Sun, Jul 06 2008. 11 01 PM IST