Home >Industry >Energy >Hong Kong’s electricity provider to invest $2 billion to boost India capacity

Gandhinagar/New Delhi: CLP Holdings Ltd, Hong Kong’s biggest electricity provider will invest around $2 billion to boost its power production capacity in India by 2,000 megawatts (MW), resolving to put additional resources in the country some two years after threatening to exit it because of erratic fuel supplies to its plants.

“We have decided to set up a 2,000MW power plant at Paguthan (in Gujarat’s Bharuch district) and we aim to invest about $2 billion for this," said CLP Holdings chief executive officer (CEO) Richard Lancaster, who was in Gandhinagar to attend a global CEO conclave as part of the ongoing Vibrant Gujarat Global Summit.

The Wall Street Journal had reported on 19 December 2012 that CLP Holdings had written to then prime minister Manmohan Singh that it may be forced to “reconsider" its projects in India as it was “bleeding every day because of a fuel shortage, infrastructure bottlenecks and lack of policy initiatives to support growth."

CLP Holdings’ newfound enthusiasm may be partly to do with the favourable economic sentiment prevailing in the country after the business-friendly Narendra Modi government took charge in May.

Asked if there has been a shift in investors’ confidence due to a change in government at the centre, Lancaster said that there have been ups and downs. “But we have a commitment towards India. We see rewards in the future," Lancaster added.

For the Modi government, the fuel supply shortage and its effect on power production are among issues that need its most urgent attention.

Growth in coal production has failed to keep pace with demand—the power sector consumes nearly 78% of domestic output. Many gas-based plants are idling because of declining production from Reliance Industries Ltd’s D6 block in the Krishna-Godavari basin, the country’s largest reservoir of the fuel. The government is trying to rekindle waning interest in India’s hydrocarbon sector.

Of India’s installed power generation capacity of 255,012.79MW, power projects totalling 153,570.89MW are fuelled by coal and a capacity of 22,971.25 MW is gas-based.

“The Paguthan plant is near its peaking point. The power unit had a plant load factor (PLF) of 75%, but it has come down to single digits in the last 18 months. Availability of gas has been a problem in India. We believe in clean coal-fired technology and we have a lot of space for expansion at the location," Lancaster said. “We are also keen on setting up solar projects in the country and are looking into this."

The Bharatiya Janata Party government has substantially raised an earlier solar energy target of achieving 20,000MW capacity by 2022 to 100,000MW. It has also articulated a blueprint for energy security that guarantees adequate supply of power at affordable prices. India has been hard-pressed to generate enough power to keep its economic engine chugging, and at a price that makes its manufacturing competitive.

“The country is craving for energy security and energy at affordable prices. India will be self-sufficient in energy," Piyush Goyal, minister for power, coal and new and renewable energy, had said.

CLP Holdings’ original plan was to add another 655MW unit at Paguthan, but a shortage in gas supply had led it to reconsider the plans for India. CLP has also installed 1,000MW of wind power projects in the country. Asked about tying up fuel resources, Lancaster said a feasibility study was on and that they would soon finalize it.

Mint reported on 11 February 2013 about CLP India Pvt. Ltd considering an impairment on its books due to risks arising from erratic fuel supplies to its 1,320MW Jhajjar project in Haryana. Impairment is an accounting practice in which a company decides to write down the value of an asset.

CLP Holdings, founded in 1901 as China Light and Power Co. Ltd in Hong Kong, was among the two significant overseas entrants in India’s power generation sector along with US-based AES Corp. While AES decided to wind up most of its operations here, while retaining a stake it owns in Orissa Power Generation Corp. Ltd, CLP’s impairment consideration stemmed from the low PLF at the 6,000 crore Jhajjar project.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Edit Profile
My ReadsRedeem a Gift CardLogout