Addressing shareholders at its Annual General Meeting, R-Power Chairman Ambani said that the company was on track to achieve a total operating capacity of 5,000 Mw by the end of 2012. He further said that R-Power’s four billion tonnes of captive coal resources in India and Indonesia would insulate it from fuel supply risks.

Ambani said that R-Power was set to commence coal production in India and Indonesia next year and poised to join the league of the world’s top ten thermal coal producing companies with a production capability of up to 100 million tonnes per annum.

He said that the company has signed an MoU with the US Exim Bank for a USD 5-billion (Rs 25,000-crore) facility and has received approval for USD 1.6 billion (Rs 8,000 crore) — the largest in India. Besides, it has signed an MoU with Chinese banks for USD 12 billion (Rs 60,000 crore), which represents the largest support by Chinese banks outside China. The banks include Bank of China, China Development and C-Exim.

The company has received approval for USD 1.1 billion (Rs 5,500 crore) for Sasan, a first in India, he added.The company’s bank of projects with land and other critical clearances for nearly 30,000 Mw capacity was a significant advantage, as these are the most commonly cited challenges in infrastructure project development, he added.

Ambani also listed out R-Power’s partnerships with global leaders like GE, Caterpillar, Komatsu, Shanghai Electric among the benefits enjoyed by the company and said that its in-house EPC talent pool gave it further execution firepower. “The company’s innovation and financial engineering capability, has enabled it to expand sources of funding and secure competitive financing from US-EXIM, Chinese and global banks,” he said.

Ambani also said that Reliance Power was set to become India’s largest green power company and was building the country’s largest single location wind project in Maharashtra (200 Mw) at an outlay of Rs 1,400 crore.

He said that the first phase of the 1,200 Mw Rosa plant in Uttar Pradesh has demonstrated a strong operating performance and the first phase of 1,400Mw at Samalkot gas-based project would get fully commissioned in March 2012. The entire 2,400 Mw Samalkot plant will be commissioned by 2012, becoming the country’s largest gas-based power plant.

The company is also setting India’s largest solar facility in Rajasthan at an outlay of Rs 2,600 crore.

Anil Ambani said group company Reliance Power will commence coal production from its Indonesian mine next year. Anil Ambani said that his group firm Reliance Power is poised to become the country’s largest private sector power company.
Agencies

First Solar will deliver 40 Mw of its thin film modules to Reliance by year-end for its project in Jaisalmer in the western Indian state of Rajasthan. The project will supply electricity to the populous city of Mumbai.

The remaining 60 Mw will likely be delivered in 2012, under the agreement with billionaire Anil Ambani’s Reliance Power. Last month, the US Export-Import Bank approved an US $84.3 million direct loan to Reliance Power’s Dahanu Solar Power Pvt unit to purchase First Solar panels for the first 40 Mw of the project.

First Solar had said in its latest earnings conference call that India will account for about 10 per cent of its 2011 sales in megawatts and offset weakness in the top markets in Europe.
Agencies

Prime Minister Manmohan Singh has cleared the names of corporate leaders of the Indian side for the forum and the side would be led by Reliance Group Founder Chairman Anil Ambani, they said.

Ambani would also be the co-chair of the forum. Mahindra & Mahindra’s Anand Mahindra, Essar Group’s Prashant Ruia, Adani Group’s Gautam Adani, Suzlon’s Tulsi Tanti, TCS’s N Chandrasekharan, Cipla’s Yusuf Hamied, Ashok Leyland’s R Seshasayee, Bharat Forge’s Baba Kalyani and SBI’s Pratip Chaudhuri would be part of the Indian side.

The names of Indian business leaders for the bilateral forum were initially proposed by the commerce ministry in September 2011. According to sources, the idea of an India -China CEOs’ forum was formally mooted during the visit of Chinese Prime Minister Wen Jiabao in December 2010.

Both countries expect the overall trade between them to be about USD 100 billion by 2015.

Last year, the overall trade between the two countries touched USD 61.7 billion. It has crossed USD 35 billion for the January-June period this year.

Anil Ambani-led Reliance Group firm Reliance Power last year entered into an USD 8.29 billion-deal with Chinese power equipment maker Shanghai Electric Corp for the supply of 36 coal-fuelled power plants to be installed in India.

This year, another group entity Reliance Communications got a USD 1.33 billion loan facility that is underwritten by the China Development Bank, alongside participation of several other Chinese banks and financial institutions.
Agencies

When contacted, a Reliance Group spokesperson said, “These are merely enabling resolutions that will remain valid till the next AGM, but there are no plans for making any QIP or other offering of securities at this time.” Meanwhile, the proposed issue of QIP securities may be made in one or more tranches.

“…The aggregate amount raised by the issue shall not result in the increase of the issued and subscribed equity share capital of the company on the relevant date by more than 25 per cent of the then issued and subscribed equity shares of the company as on the relevant date,” the report noted.

The proposed sale of securities in international markets would also have a ceiling of 25 per cent of the issued and subscribed equity shares. Based on Monday’s market capitalisation of Rs 23,422 crore, around 25 per cent stake in the company would be worth over Rs 5,850 crore.

R-Power on its own and through its subsidiaries has a planned portfolio of over 35,000 Mw generation capacity, including both operational as well as projects under development. “In order to part finance such a large portfolio of power projects and to enhance its global competitiveness and ability to compete with the peer groups in the domestic and international markets, the company needs to strengthen its financial position and net worth by augmenting its long-term resources,” the report said.

In letter to shareholders, R-Power Chairman Anil Ambani said the company expects to commission 600-Mw Rosa Phase-II project, the 600 Mw Butibori project at Nagpur, Maharashtra and one unit of 3,960 Mw Sasan Ultra Mega Power Project (UMPP) at Madhya Pradesh, by 2012.

“Besides, we shall commission the open cycle phase of India’s largest gas based power project, the 2,400 Mw project at Samalkot, in the current financial year and the combined cycle phase by the next year,” Ambani wrote. R-Power recorded a profit of Rs 760.44 crore in 2010-11.
Agencies

On a standalone basis, RPower’s net profit fell to Rs 65 crore from Rs 148.5 crore, while its total income declined to Rs 119.5 crore from Rs 212 crore. Its operating revenues rose by nearly three-fold to Rs 542 crore in the reporting quarter.

The company said that project implementation was on track for commissioning of generation units with a cumulative capacity of 5,000 Mw at its Rosa, Butibori, Samalkot and Sasan plants by December, 2012.

Announcing the results, RPower CEO JP Chalasani said the company’s Rosa plant operated at a plant load factor (PLF) of 91 per cent during the quarter and availability was at 94 per cent. “Rosa is now among the country’s top thermal power plants in operating terms, firmly establishing the company’s execution and operational capabilities,” he added.

Certification of RPower’s 3,960-Mw Krishnapatnam Ultra Mega Power Project (UMPP) under the United Nations Framework for Carbon Credits (UNFCCC), thereby entitling it to carbon credits, makes the company the power utility with the largest number of CERs in the country. “Krishnapatnam and Sasan are the largest power plants in the world to achieve this milestone, translating to a value creation in excess of Rs 3,000 crore,” Chalasani said.

RPower, a part of the Anil Ambani Group, is among India’s leading private sector power generation companies, with a portfolio of power projects based on coal, gas, hydro and renewable energy. The company has also purchased three coal mines in Indonesia and plans to develop coal bed methane-based generation capacities.
Agencies

The power and coal mine put together are estimated to cost around Rs 24,000 crore (US $5 billion). Asked whether there was any delay in procuring land at the project site, company officials said, “majority of land required for the construction of the power plant has already been acquired. The environment clearance for the power plant has also been obtained.”

Water required for the power plant has been allocated by the government from the Tilaiya reservoir which is located at a distance of about 4 kms from the power plant. As per the Power Purchase Agreement (PPA), the first unit is scheduled to be commissioned in May, 2015 and the entire project by May, 2017, they added.

Tilaiya Ultra Mega Power Project (UMPP) is a pit-head power project and has been allocated two captive coal mine blocks, Kerandari B and C, having reserves of almost 1.3 billion tonne. According to the company, plans for development of these mines have been prepared and are under approval by the government. The mine plan envisages production of almost 40 million tonne of coal per annum.

The power generated from this project will be supplied to 18 procurers from 10 states of northern and eastern India at a levelised tariff of Rs 1.77/kWh (Kilo Watt Hour). Tilaiya UMPP is 3,960 Mw (6 super-critical units of 660 Mw each) power project at Hazaribagh district, Jharkhand. It is the third UMPP in Reliance Power’s portfolio. The project is being developed by Jharkhand Integrated Power Limited which is a wholly owned subsidiary of the company. The power project is expected to start generating power from the year 2015.

The project was awarded for development to the company through a competitive bidding process and transferred to the company in August, 2009. Given the scale of the project and the clearances for land, environment, water, forest etc required to be undertaken by the government, some of these approvals are being obtained after the project transfer, the officials explained. Reliance Power is also developing two more such projects at Sasan (Madhya Pradesh) and Krishnapatnam (Andhra Pradesh).
Agencies

“This change by the Indonesian government will adversely impact not only Krishnapatnam, but all existing and future imported coal-based power plants in India, including UMPPs,” Ashok Khurana, the Director General of the Association of Power Producers, said. The association is likely to approach the government to find a solution in the interest of capacity addition in the country, he said.

Other issues impacting the Krishnapatnam Project include the condition of the soil where the foundation for the boiler has to be laid and land disputes at strategic locations. A team of officials of the Central Electricity Authority (CEA) recently visited the project site at Krishnapatnam in Nellore District of Andhra Pradesh. According to sources, the company has slowed down the construction of the project due to these factors.

“Even after going 75 metres down, engineers found marine sand, which may not be a good sign for laying foundation. If it has to be filled with layers, the cost would go up significantly,” sources said. When contacted, R-Power officials said the company has briefed their stand to the visiting CEA officials.According to the CEA’s latest report on the project, as of May 31, work on the boiler foundation is yet to start, sources said.

“90 per cent boundary work completed. Soil investigations for sea water intake systems are in progress. Work on boiler foundation has not yet started,” the report said. The Krishnapatnam UMPP was originally a 5×800 Mw project, which was later configured to 6×660 Mw.

It is expected that the project will start generating power from the year 2013 and will be completed before the contemplated schedule. The project achieved financial closure in July, 2009. The lenders for the project are a consortium of almost 12 banks lead by IDBI and the lending was done on a project finance basis for an estimated project cost of around Rs 17,450 crore (US $4 billion) with a debt-equity ratio of 75:25.
Agencies

“There have been concerted efforts to destabilize the markets and the investor sentiments,” Doshi said, adding that rumour-mongering by unscrupulous elements have contributed to the sharp fall in the group stocks. “In the past two weeks, this illegal bear cartel has destroyed market value of over Rs 3 lakh crore in the infrastructure sector,” he added.

Doshi said the group intends to take strong legal action against those behind the spread of the rumours, as well as those making irresponsible statements about the group. Doshi also said the group companies, Reliance Infra and RNRL, as well as their statutory auditors, have not received any notice from auditing regulator ICAI with regard to the consent settlement reached by the two companies with Sebi.

The group stocks, however, today bounced back, defying the overall bearish sentiment in the broader market and surged by up to 11 per cent in early trade. Reliance Infrastructure, which shed 25.14 per cent  in yesterday’s session, shot up by 10.97 per cent this morning. Another major gainer from the Anil Ambani camp was Reliance Communications, which advanced by 7.22 per cent to an early peak of Rs 101.70, after hitting a record low of Rs 90.80 yesterday.

Following the debacle on the bourses yesterday, the Anil Ambani Group had issued a statement after the markets closed, alleging, “a series of completely baseless and motivated rumours have been spread today by our unscrupulous corporate rivals.” “This (rumour-mongering by rivals) has been accompanied by vicious and illegal bear-hammering of our listed stocks to create panic and destabilise the markets,” the group had said.

“We have made a formal complaint to SEBI and the stock exchanges to immediately investigate these illegal trades and take appropriate action to safeguard the interests of our over 11 million investors,” it added. Shares of Reliance Broadcast Network also went up by 5.37 per cent, while Reliance Capital jumped by 10.51 per cent, Reliance MediaWorks by 9.31 per cent and Reliance Power by 5.3 per cent today.
Agencies

According to a senior company official, who did not wish to be identified, the project in South Sumatra involves development of a 2- billion mt coal mine, a 200-km railway line, a port and a 2,000-Mw power project at a cost of US $3.5 billion. The project in Jambi involves another coal mining unit, along with a port, railway line and a small power plant. It will cost US $1.5 billion without the power project.

Reliance Coal Resources, a subsidiary of Reliance Power, will sign two MoUs with representatives of the governments of both the provinces in New Delhi on Tuesday. Reliance ADA Group chairman Anil Ambani and Indonesian President Susilo Bambang Yudhoyono are exected to be present during the occasion.

Fiscal concessions, including land, are being offered to Reliance Power to make it attractive for them to invest in Indonesia, the official said. The investment for the development of the coal mine, rail & port infrastructure and the power project in Sumatra would be made in the next five years.

In 2010, Reliance Power’s wholly owned subsidiary Reliance Coal Resources had acquired three coal mines owned by two companies PT Sriwijaya Bintang Tiga Energi and PT Brayan Bintang Tiga Energi in the South Sumatra province. The three mines are spread over 1,25,000 acres and have over 2 billion mt of coal. The Indonesian government is providing the other concessions as Reliance Power would develop the other projects associated with it which include the railway line, port and power.

Coal from these mines will be exported for Reliance Power’s Krishnapatnam Ultra Mega Power Project in Andhra Pradesh. which is based on imported coal and also used for its 2000 Mw project in Indonesia.

These mines would ensure steady supply to the Krishnapatnam Project and also be more economical than other imported coal. Officials said talks are already on with banks to finance the first project in south Sumatra.

Times of India

The estimated interest cost savings through the offshore loans amounting to US $ 1.1 billion (over Rs 5,000 crore) is even higher than R-Power’s total equity contribution for the ultra-mega power project (UMPP), sources said.

The company’s 4,000 Mw project has received final commitments for this loan from Chinese banks, subsequent to which the interest outflow for the project will reduce by over Rs 6,500 crore, they added.

The fresh funding has reduced the total interest cost for the project from Rs 16,175 crore, in the initial financing arrangement, to Rs 9,666 crore after the closure of offshore loans at low interest rates, the sources said.

When contacted, an R-Power spokesperson declined to give details, but said that “it is our constant endeavor to optimise the financing of our projects to increase the value to our shareholders.”

The company had tied up initial financing, predominantly in rupee loans, for the project in April 2009 with local banks and financial institutions, led by public sector giant SBI .

The final approval for the fresh term loan facilities totaling US $ 1.11 billion  was given by Bank of China (BOC), China Development Bank (CDB) and The Export Import Bank of China (C-EXIM) (along with Standard Chartered Bank) during the India visit of Chinese Premier Wen Jiabao last month.

This funding for the Sasan UMPP followed the Exim Bank of the US providing final approval in November 2010 for a US $ 917 million loan guarantee to the same project.

The off-shore lenders traditionally do not have appetite for long maturity loans, making these loans unattractive for infrastructure projects. However, R-Power has managed loans with a maturity period of as long as 15 years.

Besides, the banks did not ask for bank guarantees or sponsors’ support and relied only on the projected cash flows of the project for amortisation of their loans, the sources said.

Offshore loans have helped R-Power to diversify its sources of financing and reduce dependence on the domestic commercial banks and financial institutions.

The estimated project cost of about US $ 4.3 billion of the project in Sasan, Madhya Pradesh, is being financed by equity contribution of US $ 1.2 billion and term loans of US $ 3.1 billion.