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Business News/ Companies / People/  Shanghai Electric to sign $8.3 bn contracts with R-Adag
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Shanghai Electric to sign $8.3 bn contracts with R-Adag

Shanghai Electric to sign $8.3 bn contracts with R-Adag

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Shanghai /Hong Kong: Shanghai Electric Group has won a $8.29 billion deal to supply power equipment to Anil Ambani’s Reliance Group, prompting its shares to jump to their highest in 30 months.

Shanghai Electric, the largest power producer in Shanghai, said in a statement late on Wednesday that it will sell 36 coal-fired thermal power generation units, spare parts and related services to Reliance ADA Group over a 10-year period.

It will deliver three to four of these power generation units each year, which will bring as much as $600 million in annual sales revenue each year, or about 6-7% of its total revenue for 2009, Shanghai Electric said.

Shares in Shanghai Electric, which has a market value of $16.96 billion, rose as much a 7.43% to HK$5.06 -- its highest since April 2008 -- before easing to HK$4.85 in mid-day trade.

The stock has surged about 40% this year, outperforming the 6% gain in the broader Hang Seng Index.

Shanghai Electric, led by Xu Jianguo, said it will sign the deal with Reliance’s Ambani later on Thursday, adding that the deal will help lift its market share in the Indian power-equipment market.

Shanghai Electric and Reliance Infrastructure already have a close working relationship, with the Chinese firm having supplied equipment to other power projects. The two also set up a $3 billion joint venture in 2008 to manufacture turbines and generators in India.

India, the world’s sixth-largest energy consumer, has set an ambitious target of lifting its generation capacity to 100,000 megawatts during (MW) 2012-17 and plans to spend $1 trillion on infrastructure during the period.

The country is expected to add only about 62,000 MW in the current five-year period, compared with the target of 78,000 MW.

About 84% of Shanghai Electric’s revenue came from China last year and just over 16% from overseas. The company posted on Wednesday a 33.2% rise in its third- quarter profit from a year earlier.

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Published: 28 Oct 2010, 11:23 AM IST
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