The Indian subsidiary of American energy major AES Corp. is evaluating opportunities to bid in partnership with another company for the 4,000MW each ultra mega power projects (UMPPs) in Jharkhand and Orissa.
Each of the coal pit-head projects that the company is interested in bidding for may require an investment of around Rs16,000 crore.
“We might partner with another company for these coal pit-head projects but will keep the controlling stake with ourselves. We are open to partnership with both an engineering, procurement and construction company and an equity partnership,” said Sanjeev Aggarwal, director, business development, AES (India) Pvt. Ltd.
But “we are not interested in bidding for coastal UMPPs as there is a lot of volatility in the international coal prices. As India is a price-conscious market, we have to also look at long-term sustainability of our projects,” said Aggarwal.
Collaboration with a strategic power generation equipment manufacturer would be critical for keeping generation costs low as these projects are being awarded through competitive bidding.
AES had earlier contemplated bidding for the Sasan project in Madhya Pradesh, which is currenly stuck in a controversy over the winning bidder’s overseas partner.
“The size of the UMPPs makes them a good business opportunity,” says Manish Makhan, associate director with Fitch Ratings India. “With the regulatory and statutory clearances being taken care of by the special purpose vehicles created for the projects, a lot of corporates have shown interest in these projects.”
AES entered India in 1993 in power generation and distribution and currently operates and owns a 49% stake in the Orissa Power Generation Corp. Ltd’s 420MW Ib Valley power plant which it bought at $143 million (Rs578 crore).
The Union government proposes to build nine UMPPs, at Sasan, Mundra (Gujarat), Tadri (Karnataka), Girye (Maharashtra), Akaltara (Chhattisgarh), Cheyuur (Tamil Nadu), Jharsuguda (Orissa), Krishnapattnam (Andhra Pradesh) and Tilaiya (Jharkhand).
“India is a good investment opportunity for the overseas utilities as the tariff regime is favourable and the aggregate losses of the state utilities have come down. Most of the corporates are taking a calculated risk,” Makhan said.
As part of its other India plans, AES also intends to invest around $1.2 billion each in two 1,200MW capacity coal-based power plants in Orissa and Chhattisgarh over the next two to three years as reported by Minton 18 June.
The company also plans to develop power generation projects with a combined capacity of 5,000MW within the next five to seven years.