Reliance Power halves generation goal

Reliance Power has halved its generation capacity target due to fuel related issues.

Its initial public offer (IPO) prospectus in 2008 had suggested setting up around 18,000 mw coal and gas based generation capacity by 2015.

However, on Tuesday, J P Chalasani, its CEO, said it can at best install 8,960 mw by that year.

The company aims to have a capacity of 5,000 mw by the end of 2012, he said. This includes the 2,400 mw Samalkot plant, the first 660 mw unit of its Sasan project, the 600 mw Butibori plant and a 140 mw solar plant.

The company had also talked about setting up an additional 2,100 mw of hydropower capacity, involving three projects, by 2015. Chalasani did not reveal the status of these projects.

He blamed the sector’s ills on the fuel supply crunch and said the scenario has changed drastically in the last four years, mainly given the policy changes in Indonesia and the poor financial health of state electricity boards.

Generation companies are not willing to take the risk of setting up imported coal-based thermal plants and the matter could only be resolved if a pass-through of costs is allowed, he said.

Asked why the company has not moved the Central Electricity Regulatory Commission (CERC) on this issue, particularly involving its Krishnapatnam project, Chalasani said the bone of contention between his company and the state discom is whether the change in Indonesian law is a force majeure — something that cannot be resolved by the CERC.

Meanwhile, the impasse over fuel has taken a huge toll on Reliance Power’s stock.

It had offered shares at Rs450 a share (adjusted price of Rs281.25 per share) in the IPO.

On Tuesday, the shares closed at Rs93.05 apiece on BSE.