RIL may bid for Surguja UMPP in Chhattisgarh

After the telecom foray, Mukesh Ambani has set his sights on the power sector, with Reliance Industries (RIL) planning to bid for the Surguja ultra mega power project (UMPP) in Chhattisgarh. The government has set July 5 as the deadline for submitting the bid.

The Chhattisgarh entry would be RIL's second major diversification plan after the Ambani brothers last month cancelled the non-compete agreements that barred them from entering each other's businesses. A Reliance Industries spokesperson, however, declined to comment on the company's plans to enter the power sector.

With RIL sitting on a mountain of cash, funding its newly-identified high-growth businesses like telecom and power should not be a problem for the company. Besides, the company on the strength of its balance sheet has been raising cheap money from the market. RIL last week mopped up $1 billion, a seven-year loan at an attractive rate. The 4,000-mw UMPP calls for an investment of about Rs 16,000 crore.

Interestingly, Reliance ADA group, controlled by Mukesh's younger brother Anil, may not bid for the domestic coal-fired power station to be set up in Chhattisgarh. According to bidding terms, the contender should not have more than three UMPPs at a pre-commissioning stage. The contender can bid for the next one only after all the units of one of the three projects achieve commercial operation (commissioning) date 30 days prior to the submission of the bid.Of the four UMPPs allotted by the government, Reliance Power has won three of them — Sasan in Madhya Pradesh, Krishnapatnam in Andhra Pradesh and Tilaya in Jharkhand. Tata Power bagged the fourth one at Mundra in Gujarat.The first unit of Sasan project is expected to be commissioned by the end of 2012, an analyst tracking the power sector said, adding that for the other two projects Reliance Power is tying up finances. Since Reliance Power is more than two years away from commissioning its first mega plant at Sasan, it is unlikely to bid for the Chhattisgarh project.

Tata Power has said that over 50% of the work at its Mundra project has been completed. The first unit of 800 MW would be commissioned by September 2011 and the remaining four units would be operational by early 2012. Sources said Tata Power, which decided against bidding for Sasan, Krishnapatnam and Tilaya, may participate in the bidding for the Chhattisgarh project.Industry observers expect Larsen &Tourbo, Essar, Sterlite Industries, Adani Enterprises, NTPC and Jindal Power to also bid for the Chhattisgarh project.