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Friday, September 2, 2011

Jindal Power looks to buy power projects

Jindal Power, an arm of the Naveen Jindal-controlled Jindal Steel and Power, is looking to buy out power projects either with domestic coal linkages or port-based imported coal. The company is also looking to acquire thermal power projects with capacities of 1,000 mega watts and upwards.

Sushil Maroo, deputy managing director said they seek to expand capacity and were looking at acquisitions as a route. "We haven't set a target, but will try to evaluate the projects and buy some good ones," he told Business Standard. The company is open to buying projects which are port based and modeled on both domestic as well as imported coal.

He, however, did not comment on the target set in terms of power generation capacity. The company had earlier said it had long-term plans to set-up 15,000 Mw of power capacity.

Currently, Jindal Power has a 1,000-Mw integrated power project (IPP) in operation and is developing close to 6,500 Mw of coal-based power projects. It is also developing 6,100 Mw of hydroelectric power projects.

The company has also lined up an initial public offer to raise Rs 7,200 crore and is looking to fund its Chhattisgarh and Jharkhand power projects, with combined capacity of 4,380 Mw, with the money.

Acquisition of power projects by bigger groups started as a trend in 2008 after several companies with licences to develop projects decided to exit. Bangalore-based infrastructure developer GMR acquired one such project in Warora, Maharashtra, which belonged to EMCO Energy. Two months after the acquisition, the company raised the debt required for the project and began construction.

While many such assets are on the block, very few deals have been closed as sellers claim premiums on them.

“Uncertainty in fuel supply is hampering development and transactions in the power sector,” said Debasish Mishra, senior director, Deloitte Touche Tomatsu.

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