CESC to raise Rs1,000 crore through PE for new projects

Power utility CESC, an R P Goenka Group company, is planning to raise up to Rs1,000 crore through private equity for the newly floated holding company, Haldia Energy Co, to fund its Rs12,900-crore Haldia, Chandrapur (Maharashtra) and Talcher (Orissa) projects, which are to generate a total of 2,500 mw.

Addressing a press conference in Kolkata on Thursday after announcing CESC's second quarter results, Sanjiv Goenka, CESC vice-chairman, said the Rs12,900-crore funding would have a debt equity ratio of 70:30, the equity part of which would partially be funded by PE funds.

''We are talking to foreign and domestic PE funds and the process of roping in equity investors would be over by February 2011,'' Goenka said, adding that the exit of the equity funds could either be through listing Haldia Energy or buying back PE's shares. However, in case of a listing, dilution of holding would depend on the valuation of shares, he said.

Haldia Energy will be a holding company of the three power plants. While Haldia and Chandrapur have already attained financial closure obtaining all necessary clearances, Talcher is waiting for a coal linkage, following which it would make the financial closure.

The contracts for the Haldia project would be awarded in the next six weeks and the project would likely be commissioned within 36 months from the start of construction, Goenka said.
Originally conceived as a 2,000-mw merchant power project, Haldia's first phase, to generate 600 mw, has now been turned to a supporting unit for catering to CESC's licence area, where power demand has already grown by 7-8 per cent.

 Goenka said by the time the Haldia project comes up, demand in the CESC licence area would be hovering at around 1,900 mw. To meet this demand, 400 mw of the 600 mw to be generated from Haldia has been earmarked for Kolkata, and the rest would be used for trading.

The debt funding for Haldia, estimated to be around Rs2,100 crore of the total investment of Rs3,000 crore, would equally be done by ICICI and IDBI, Goenka said.

He said for the other three proposed projects at Pirpainty in Bihar (2,000 mw), Dumka in Jharkhand (1,000 mw) and Balagarh in West Bengal (1,320 mw), CESC was exploring the option to float another holding company and Balagarh Power Co Ltd, which has already been floated as a CESC subsidiary, might be merged with Haldia Energy Ltd.