London Stock Exchange-listed OPG Power Ventures is planning to increase its power capacity to 750 megawatt (Mw) from the current 112 Mw. The company will set up three new power plants — an 80-Mw and a 160-Mw power plants in Chennai and a 300-Mw power plant in Kutch, Gujarat.
The AIM-listed company will invest Rs 3,000 crore, which is funded 30 per cent from equity and the remaining from debt. The company has already raised debt of around Rs 2,100 crore from a consortium of nine banks.
This investment comes at a time when many power sector companies are freezing their plans for incremental investments. GMR, Tata Power, GVK and Adani Power said they would go slow on newer investments. Lack of domestic coal and higher price of international coal, besides slower pace of land acquisition and approvals, have hindered their expansion plans.
However, OPG is not facing these issues. The company has decided to use imported coal to operate its power plants. “Our power plants are designed to use domestic coal as well as high-moisture Indonesian coal,” said OPG Power Ventures CEO Arvind Gupta.
Gupta said the cost would also be lower, as high-moisture coal is available at competitive prices compared to high-grade coal. The company’s coal cost comes up to as much as Rs 3 per unit. The company has all its land and approvals in place. And, two of the three power plants being set up are brownfield projects.
The company’s new power projects are all coal-based and will start generating power by 2014. These are being set up near ports, which will give the company advantage and flexibility to use both domestic and imported coal.
OPG follows a group captive model where power is sold to industrial and commercial groups. It has already signed power sale agreements with around 30 units. “These are from various sectors such as textiles, steel and IT companies,” said Gupta.
Currently, OPG has existing operating capacity of 112 Mw, generated by its three power plants. Located in Tamil Nadu and Gujarat, these plants are one coal-fired, one gas-fired and the third a waste heat recovery one. This capacity is being expanded by an additional unit of 77 Mw, which will start generating power shortly.
OPG sources its equipment from state-owned Bharat Heavy Electricals Ltd and Ansaldo Boilers.