CLP India to buy distressed projects in the power sector

CLP India to buy distressed projects in the power sector
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First Published: Sun, Jan 11 2009. 11 29 PM IST

Investment opportunity: CLP headquarters. CLP India said it has been approached by bankers to take minority equity stakes in power projects facing financial constraints. It was also scouting for hydro
Investment opportunity: CLP headquarters. CLP India said it has been approached by bankers to take minority equity stakes in power projects facing financial constraints. It was also scouting for hydro
Updated: Sun, Jan 11 2009. 11 29 PM IST
New Delhi: The India arm of Hong Kong-based CLP Group said it plans to take over projects in the country that may be surrendered by developers, who find it tough to raise resources in a tightening credit market.
“This (current) financial crisis will create openings for us in projects that were quoted very aggressively for and will now be in no capacity to be completed,” said Andrew Brandler, chief executive of CLP Holdings Ltd, the group holding company.
Investment opportunity: CLP headquarters. CLP India said it has been approached by bankers to take minority equity stakes in power projects facing financial constraints. It was also scouting for hydropower projects.
“We know the business and we knew that these projects were not financially viable at the tariffs which were quoted. We have a good chance of getting a share of that opportunity,” he said.
CLP, founded in 1901 as China Light and Power Co. Ltd in Hong Kong, is among the two significant overseas entrants in India’s power generation sector along with US-based AES Corp.
CLP has recently been awarded the contract to build a 1,320MW coal-fuelled project at Jhajjar in Haryana.
In a related development, CLP said it has also been approached by bankers to take minority equity stakes in power projects that are facing financial constraints.
“We have been approached by bankers...the offers have intensified in the past few months,” said Rajiv Mishra, managing director, CLP Power India Pvt. Ltd.
In 2003 CLP acquired Gujarat Paguthan Energy Corp. Pvt. Ltd, which has a 655MW gas-fired combined-cycle power station, making the company one of the largest foreign investors in the domestic power sector.
The company’s plans for an additional 1,000MW of gas-based generation expansion has, however, been stuck for want of gas.
“The expansion project is stuck in the absence of gas, though we have all the approvals and the land,” Brandler added.
The company is also scouting for opportunities in the hydropower sector. “This is part of our strategy to build a diversified portfolio,” said Brandler.
While India has a power generation capacity of 145,006MW, the 11th Plan (2007-12) has set a target of additional 78,577MW capacity, requiring at current estimates, some Rs10.31 trillion in investments.
But according to the power ministry, the government expects to face a Rs4.51 trillion funding shortfall. The problem has worsened due to the financial crisis with a lot of private sector projects still awaiting financial closure.
While CLP’s India arm posted a net profit of Rs250 crore on revenues of Rs1,300 crore in 2007-08, the CLP Group posted a net profit of $1.3 billion (Rs6,357 crore) on revenues of HK$50 billion. While the financials for CLP India are for the fiscal 2008, the financials for the CLP Group are for the calendar year 2007-08.
Anish De, chief executive officer of energy consulting firm Mercados Asia, said: “This is going to happen. Even we are seeing other late-stage projects taking equity at par rather than at substantial premium that such projects would have attracted. Several of early-stage projects could be up for complete or substantial investment.”
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First Published: Sun, Jan 11 2009. 11 29 PM IST