The Anil Ambani-controlled company expects to complete the Rs7,200 crore 2,400 mw gas-based power project at Samalkot in Andhra Pradesh for its sister company Reliance Power by the end of the year.
Reliance Infrastructure on Thursday announced it has won the right to build India’s biggest gas-based power plant, thereby helping the infrastructure company’s engineering, construction and procurement (EPC) business to emerge as the third largest player behind Larsen and Toubro (L&T) and Bharat Heavy Electricals Ltd (Bhel).
The Anil Ambani-controlled company expects to complete the Rs7,200 crore 2,400 mw gas-based power project at Samalkot in Andhra Pradesh for its sister company Reliance Power by the end of the year.
“This project is in the gas-rich belt in East Godavari district in Andhra Pradesh and we expect to complete it by the end of 2011,” Lalit Jalan, CEO and wholetime director of Reliance Infrastructure, said in a conference call.
With the order, the company’s total EPC order book rose to Rs30,700 crore, helping it close ranks with the second largest player, government-owned Bhel which has an EPC order book of Rs46,000 crore.
L&T is the largest player in the EPC space, having an order book of close to Rs108,000
crore.
Punj Lloyd was third largest EPC player till now with an order book of Rs28,000 crore.
Jalan, who declined to share details from where Reliance Power is going to secure the gas, said the government is going to help the company with the gas supply.
But the company’s confidence in the afternoon was seen in evening, when New Delhi announced that an agreement with Mukesh Ambani-controlled Reliance Industries, Reliance Gas Transport Infrastructure Ltd and GAIL India Ltd had been reached, which will enable power plants in Andhra Pradesh get an additional 12 million units a day.
In a complex swapping arrangement, government-owned GAIL — which gets natural gas from Reliance’s KG-D6 fields — will divert natural gas from its current supply to consumers in western and northern India, to power plants in Andhra Pradesh.
GAIL will compensate affected consumers in western and northern India with imported liquefied natural gas, priced at $4.2 per million British thermal unit, the same price at which they Reliance sells gas.
Shares of Reliance Infrastructure ended higher by 1.16% to close at Rs652.80 on the Bombay Stock Exchange over previous close.
Even as the benchmark BSE Sensex closed down 1.14% to end at 18149.87 on Thursday.
The company expects the Butibori project to be commissioned by March 2012 while the first unit of Sasan ultra mega project is expected to be commissioned by the third quarter of 2012.
Reliance Infrastructure, formerly Reliance Energy, has seen an impressive growth in EPC space in the third quarter ended December 2010, as earning before interest and tax jumped 148% over the year-ago period to Rs103 crore. This, according to a Mumbai-based analyst of a domestic brokerage, can be explained by company shifting to do “high margin work in power sector than some of the low-margin work in highway constructions.”
“About 60% of the EPC orders are from Reliance Power, with 20% from external parties while the (remaining) 20% are orders of Reliance Infra,” said Jalan.
Last year in October, during the India visit of American President Barack Obama, the Anil Ambani-owned RADA Group inked $750 million contract with General Electric for gas turbine power equipment. The company expects GE to deliver the gas and steam turbine orders by July-September quarter this year.
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