CESC, the RPG group power utility, is planning to raise funds for two of its thermal power projects — 600 megawatt each plants at Haldia in West Bengal and Chandrapur in Maharashtra.
The company is also taking the special purpose vehicle (SPV) route for expansion.
It is learnt that funds could either be raised through parent CESC or the SPVs and the fundraising could take place by the end of 2010-11 itself if the market outlook is good.
According to an industry source, around Rs 2,500 crore each would be required for Haldia and Chandrapur in the first phase, which will have a debt-equity ratio of 3:1. Consequently, the combined equity component would be around Rs 1,250 crore, which, the source said, would be met through internal accruals.
“But later, the stake sale could take place from these subsidiaries to a private equity player so that CESC’s shareholders could benefit from the capital infusion,” the source said.
An email to RPG Enterprises vice-chairman Sanjiv Goenka elicited no response.
According to an industry source, the SPVs will initially remain wholly owned subsidiaries of CESC and could be utilised to raise funds and, at a later date, stakes in them could be offloaded to a private equity player to unlock value for the parent company’s shareholders.
While Haldia Energy Ltd and Dhariwal Infrastructure Pvt Ltd are the two SPVs that will take forward the projects in Haldia and Chandrapur, respectively, two more such companies are on the cards for CESC’s 1,000 mw Jharkhand and 2x660 mw Orissa projects.
While Dhariwal Infrastructure would be renamed CESC Infrastructure Ltd, its project, with a capital expenditure of 2,800 crore, has achieved financial closure.
According to a Citigroup Global Markets report, the progress of CESC’s project in Jharkhand has been slow due to political uncertainties in that state. It is expected that after the installation of the new government, the process will speed up.
In Orissa, 450 acres are already in the company’s possession and another 53 acres remain to be acquired. CESC expects to get the coal linkage soon as well.
In Haldia, 270 acres have been handed over to the company by the state government. However, another 27 acres are yet to be acquired.
While Haldia is expected to use imported coal, in Chandrapur the coal linkage is in place with a Coal India subsidiary. CESC can use up to 25% of its requirement from imported coal for Haldia but it depends on the cost since the coal sourced from an open-cast mine is more expensive compared to that from underground.
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