Infrastructure major Lanco Infratech will become the top independent power producer in the country by March 2011 if commissioning of its projects happens on schedule.
The company is likely to touch a cumulative generation capacity of 4,000 megawatt from the current 719 mw in the next one-year through projects which are at various stages of execution.
“We will definitely be the leading IPP once the capacities become operational. As of now, we are meeting all the execution schedules,” Lanco chairman L Madhusudan Rao told DNA.
More important to the company is the merchant power sales that would increase from the total installed capacity. “We will be able to sell close to 800 mw in the market out of the total capacity. Though there are certain issues that are pending with one of our project (Amarkantak) in terms of merchant sale, even excluding that we should be able to meet the 800 mw target,” Rao said. This would mean that about 20% of the capacity would be available for merchant sale.
According to analysts, Lanco would be able to get a merchant tariff of about Rs 5 per unit in the first year though the tariff is likely to
drop Rs 4.5, Rs 4 and Rs 3.5 in the subsequent years.
The new capacity would use three basic fuels.
“We will have a majority of thermal capacity. About 900 mw is expected to be through gas and another 100 mw in the hydel category. We have tied up with suppliers for the entire gas requirement,” Rao said.
However, analysts, while appreciating the company’s efforts to emerge as a leading IPP, have a word of caution.
“Projects under construction comprise 40% of SOTP value and hence execution risk is significant. We believe Lanco’s integrated business model, with an in-house EPC division, does help in mitigating this to some extent. While projects under construction are fully funded, projects under development (6000 mw) are yet to achieve financial closure,” Bank of America Merrill Lynch analysts Manish Sarawagi and Bharat Parekh said in their January 20 report.
Lanco recently commissioned 233 mw capacity at Kondapalli, where it already has a unit. The new capacity is expected to become available from April 2010.
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