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Rediff.com  » Business » Texas Power to invest $10 billion in India

Texas Power to invest $10 billion in India

Source: PTI
February 17, 2006 20:28 IST
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Over a decade after United States energy trader Enron Corp first entered India for Dabhol power plant, another Houston-based company Texas Power Generation LLC on Friday announced ambitious plans to invest up to $10 billion in next ten years for setting up power plants in the country.

To start with, TPG has signed an MoU with Chhattisgarh government for a 1,600 Mw coal-fired plant in the state at an investment of about Rs 6,000 crore (Rs 60 billion). The company has also applied for a mining block to the coal ministry which, if allotted, would require investment of another Rs 2,000 crore (Rs 20 billion).

"After signing the MoU in May last year, we are currently in the process of conducting feasibility studies. We hope to start construction by early 2007 and complete the project by 2010-11," TPG Chairman Vijay Jain told reporters in New Delhi.

The project is being set up with a debt-equity ratio of 70:30. The company will invest $400 million (about Rs 1,800 crore -- Rs 18 billion) as equity entirely through internal accruals.

The debt would be arranged from European and US lenders, India-born Jain said, but admitted this is the first time his group would set up power plants anywhere in the world.

The company also plans to invest up to $10 billion over the next 5-10 years for more projects, he said, adding they have initiated talks with various states including Andhra Pradesh for a 2,000 Mw plant.

Texas Power's ambitious plans come at a time when foreign participation in the power sector is very little.

Its more widely-known US counterpart Enron, which was also based in Houston, had set up and later abandoned the 2,184 Mw Dabhol plant in Maharashtra. Enron has since then went bankrupt while the Dabhol plant is now being owned by public sector NTPC and Gail (India) Ltd.

Texas Power Generation LLC has set up a India subsidiary named Texas Power Generation Ltd and already invested about $50 million in Chhattisgarh project. The plant is being set up in Raigarh district and the company hopes to generate power at about Rs 1.70 per unit.

The project, which was initially envisaged to be of 1,320 MW, will now be built with 800 Mw units making it a total of 1,600 Mw. It would later be expanded to over 3,000 Mw, Jain said.

The company has also signed an MoU with trading company PTC India Ltd for selling the electricity generated from the plant. It plans to enter into a formal Power Purchase Agreement with PTC shortly for a 25-year period, Jain said.

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