Aditya Birla Group may consider Sona Power project

Aditya Birla Group may consider Sona Power project

New Delhi: The Aditya Birla Group is considering the acquisition of Sona Power’s proposed 600MW coal-based project in Chhattisgarh’s Raigarh district as part of plans to re-enter the sector.

“The due diligence for the project has been completed by the Aditya Birla Group," said a person aware of the development who did not want to be identified.

Mint had reported on 30 January about the group’s decision to get back into the power sector.

“The proposed project will have two units of 300MW each. The interesting part is that the due diligence has been carried out without signing the term sheet," said another person aware of the development who also requested anonymity.

The average valuation for greenfield projects are in the range of 25-60 lakh per MW, depending on fuel and water allocation, environmental clearance, and the status of land acquisition.

While an Aditya Birla Group spokesperson said “we don’t comment on market speculation", group chairman Kumar Mangalam Birla, in an interview early this week, said: “We are also interested in power, which is an interesting space, and we are already looking at several assets in power, too. But if we won’t get anything that suits us, we won’t foray into the business at all."

A message left for Sona Power promoter Baldev Singh Bhatia at his Raipur, Chhattisgarh, office remained unanswered as of press time. A.K. Dubey, chief executive of Sona Power, declined to comment.

“There is a huge demand-supply gap in the Indian power sector. Due to the deficit, there lies a tremendous amount of opportunity, which would result in a lot of new players entering the sector. The Birla group is looking at the sector precisely due to this reason," said Amol Kotwal, deputy director of energy and power systems practice for South Asia and West Asia at Frost and Sullivan.

India faces a peak shortage of nearly 12%, and the country has an abysmal track record in adding capacity. India currently has a power generation capacity of 169,748MW.

The 11th Plan had set a target of adding 78,577MW of generation capacity, which was later lowered to 62,374MW. The government also revised the current fiscal year’s target of adding 20,359MW of generation capacity to 18,600MW. Even then, a capacity of just 9,730.5MW was added in the first nine months of this fiscal year.

According to an internal analysis of the power ministry, a capacity addition of 15,000MW in this fiscal and overall capacity addition of around 55,000MW in the current Plan is expected.

The group had earlier sold two proposed 1,000MW projects and had liquidated another one soon after it had completed first-stage work, including land acquisition and environmental clearances.

In 2006, the group sold its 1,000MW Rosa Power Supply Co. Ltd in Uttar Pradesh to Reliance Energy Ltd, owned by the Reliance-Anil Dhirubhai Ambani Group. The next year, it sold Bina Power Supply Co. Ltd in Madhya Pradesh to Jaiprakash Associates Ltd. The third power plant near Ennore in Chennai, which would have used imported liquified natural gas from Qatar, was wound up in 2006 after delays in state government clearances.

The Aditya Birla Group has a turnover of $30 billion (Rs 1.4 trillion) with operations spread across 40 countries. It has plans to increase revenue to $65 billion in the next five years. Birla has expanded his business primarily through acquisitions, buying 22 companies in the past 15 years, both overseas and in India.