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Wednesday, September 17, 2008

Reliance Power Plans Atomic Plants After Rules Change

Reliance Power Ltd., the energy company controlled by billionaire Anil Ambani, is in talks with General Electric Co. and Areva SA to build nuclear plants after India changes rules to allow companies to invest in atomic energy.

The utility plans to build nuclear stations at two sites, Chief Executive Officer Jayarama Chalasani said by telephone in Mumbai. Reliance Power is also in talks with Toshiba Corp.'s Westinghouse Electric Co. and Russia's Rosatom Corp., he said.

India may end a government monopoly on nuclear power generation after winning the backing of a 45-nation suppliers group this month to trade in atomic fuel and technology. Reliance joins state-run Nuclear Power Corp., GVK Power and Infrastructure Ltd. and GMR Energy Ltd., which said last week they are in talks with overseas companies to set up atomic plants.

``Private sector presence in India's nuclear business has a long way to go,'' said Girish Solanki, an analyst at Angel Broking Ltd. in Mumbai ``Entering the business may be a positive for Reliance and other private sector companies but it's too early to talk about the impact.'' He has a ``neutral'' rating on the stock.

Reliance Power shares climbed 3.7 rupees, or 2.4 percent, to 160.65 rupees at the close in Mumbai trading. The stock earlier today dropped 17.2 percent to the lowest since July 23, according to data compiled by Bloomberg. India's 30-share, benchmark Sensitive Index declined 0.1 percent.

Private Companies

The government may unveil a policy to allow private companies access to the nuclear market after national elections due by May, Rajendra Pachauri, an adviser to Prime Minister Manmohan Singh on climate change, said Sept. 12. Pachauri also chairs a United Nations panel of climate scientists who shared the 2007 Nobel Peace Prize with Al Gore.

The setting up of nuclear projects may be opened up to include private and other state-run companies, India's Planning Commission has said. The effect of allowing private companies may become visible after 2011, the panel said.

India, the world's second-fastest growing major economy, won a waiver of a ban on trade from the Nuclear Suppliers Group on Sept. 6 as part of a U.S.-backed deal. The South Asian nation plans to add 40,000 megawatts of nuclear power capacity by 2020, a third of the current total output, to beat shortages of as much as 17 percent during peak hours.

The NSG endorsement may give France's Areva and Russia's Rosatom a head start on Indian orders because U.S. companies need congressional approval to participate in supplying technology and fuel. U.S. President George W. Bush has submitted the agreement with India to Congress for final approval, seeking to win ratification before it adjourns on Sept. 26.

`Small Team'

Nuclear Power plans to start talks with General Electric and Areva this month while waiting for Congress to clear the deal, Chairman Shreyans Kumar Jain said Sept. 8. The state monopoly, which may buy $14 billion of equipment in 2009, operates 17 reactors that produce 4,120 megawatts of electricity.

Mumbai-based Reliance Power has hired 10 people, some of them former employees of Nuclear Power, Chalasani said.

``We've been preparing for the last two years,'' Chalasani said yesterday. ``There is a small team in place that is studying the market.'' As many as 200 people may be hired to manage its planned nuclear power business, he said.

Reliance Power wants land to be assigned for nuclear projects. The government should decide where the new plants should be located after conducting studies, Chalasani said.

Generation Capacity

The company, which raised $3 billion in India's biggest share sale, plans to spend $28 billion on building 28,200 megawatts of coal-fired and water-based electricity generation capacity in the next five years. Reliance currently generates 941 megawatts.

The generator may build 3,000 megawatts of nuclear capacity, according to Chalasani. The cost to build one megawatt of nuclear power may be as much as 80 million rupees and isn't included in the spending plans already announced, he said.

The utility is currently building two so-called ultra-mega power projects at Sasan in central India and Krishnapatnam in the south. Each coal-fired plant will be capable of generating 4,000 megawatts.

The company ``has a lot on its plate in terms of implementation,'' Angel Broking's Solanki said.

(Source: Bloomberg)

1 comment:

Anonymous said...

Wonder where they got that info that India plans to add 40,000 megawatts by 2020. That is a heck of a lot.

It also goes back to my old theory that India and countries like it need aggressive industrialists like Ambani to develop the country.