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Reliance Power has a ‘buy’ on Dabhol, but it’s not for sale, yet

Reliance Power has a ‘buy’ on Dabhol, but it’s not for sale, yet
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First Published: Mon, Jan 07 2008. 12 16 AM IST

Investment opportunity: The Dabhol power station. Anil Ambani-led Reliance Power Ltd is interested in investing in the power plant if the government allows private participation.
Investment opportunity: The Dabhol power station. Anil Ambani-led Reliance Power Ltd is interested in investing in the power plant if the government allows private participation.
Updated: Mon, Jan 07 2008. 12 16 AM IST
Anil Ambani’s Reliance Power Ltd said it would like to invest in the Ratnagiri Gas and Power Pvt. Ltd if private companies are allowed in the project.
“We may consider investing in the Dabhol integrated power plant when the government allows private sector participation after things stabilize for project,” said Ambani, chairman of his namesake conglomerate that is going to tap capital markets and raise around Rs11,000 crore in an initial public offering of Reliance Power.
While Ambani’s wishes may yet come true, those who own major shares in the so-called Dabhol project say there no plans to seek private investors.
“Dabhol is an integrated power project with an LNG (liquefied?natural?gas) terminal in which we, along with NTPC Ltd, are the majority shareholder,” said U.D. Choubey, chairman and managing director of GAIL India Ltd. “I do not have any information whether there is any such present proposal or one in the offing.”
Investment opportunity: The Dabhol power station. Anil Ambani-led Reliance Power Ltd is interested in investing in the power plant if the government allows private participation.
A senior Ratnagiri executive, who didn’t want to be named, added: “There is no such proposal for allowing private sector participation in Dabhol.”
Some analysts believe it is the 1.2 million tonnes per annum (mtpa) LNG terminal at the project, which will be increased to 5mtpa by 2010, that has caught Ambani’s attention. Reliance Power has two gas-fired projects of 10,280MW in its portfolio and wants to develop more gas-based projects.
“In order to source LNG supplies from overseas for its gas-based projects, Reliance will need an LNG terminal. It makes tremendous sense if the company is able to secure long-term gas supplies,” said a New Delhi-based analyst who didn’t want to be identified.
India has only two LNG regasification terminals where LNG, which is transported in liquid form and usually by ships, needs to be converted into gas before it is used. Both are located in Gujarat and are owned by Petronet LNG Ltd and Shell India Pvt. Ltd.
NTPC and GAIL are the two main stakeholders in Ratnagiri, with each holding a 28.33% stake. Others include Maharashtra State Electricity Board, which owns 15%, and lender banks—IDBI Ltd, State Bank of India, ICICI Bank and Canara Bank.
With projected terminal costs pegged at Rs4,000 crore, an empowered group of ministers, headed by external affairs minister Pranab Mukherjee, had explored the idea of hiving off the LNG terminal to potential takers which included NTPC and GAIL. Even though NTPC and GAIL agreed to infuse an additional equity of Rs475 crore each and the Maharashtra government was ready to chip in Rs250 crore for the terminal, the idea was dropped.
Ambani confirmed that Reliance Power is evaluating opportunities to start manufacturing power generation equi-pment as first reported by Mint on 4 January. Reliance Power plans to sell a 10.1% stake starting 15 January at a price band of Rs405-450 a share.
Ambani also confirmed that Reliance Power is open to generating more power at its 4,000MW ultra mega power projects in Sasan (Madhya Pradesh) and Krishnapattnam (Andhra Pradesh), potentially generating significant revenue from open market sales of such excess power, as previously reported by Mint.
“There is no such binding contract on us for not generating more than 4,000MW each at these sites. If we can do so, we will and may sell it as merchant power,” Ambani said.
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First Published: Mon, Jan 07 2008. 12 16 AM IST
More Topics: Reliance Power | Dabhol | Anil Ambani | IPO | LNG |