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July 2, 2001
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Money > Business Headlines > Report July 2, 2001 |
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BSES to invest Rs 400 billion over next 10 yearsS Ravindran BSES has chalked out a mega investment plan of Rs 400 billion over the next 10 years. In its corporate plan for 2002-12 submitted to the financial institutions, BSES said it plans to add 9,000 mw more in generation capacity. The company also plans to enter the transmission business and add five more areas to its existing distribution business. This is one of the most ambitious plans drawn up by a private company in the power sector. BSES is planning to execute each of these projects through a series of special purpose vehicles in which it will hold majority stake. This plan is at present being discussed with financial institutions-the Life Insurance Corporation, the General Insurance Corporation and the Unit Trust of India, which have a combined stake of about 39 per cent in BSES. Confirming the move, BSES chairman and managing director RV Shahi said: "The proposal is at present being fine-tuned. The final form will emerge soon." Shahi, however, refused to divulge the exact investment figure. Power industry sources close to BSES, however, point out that it costs Rs 40 million per megawatt to set up a greenfield power project. Adding 9,000 mw would entail an investment of Rs 360 billion. Investing in five distribution circles would entail an investment of at least Rs 5 billion. Similarly, the cost of setting up three transmission networks is estimated to be around Rs 35 billion, raising the final tab to around Rs 400 billion. BSES plans to invest in the equity of the SPVs. This equity will be raised through internal accruals, debt and convertible bonds. The current debt-equity ratio of the company is 0.3:1 and with the SPVs, the debt-equity ratio will be 1:1. BSES plans to acquire two distribution circles during 2002. These will be selected from Delhi, Kanpur, Haryana, Andhra Pradesh and Karnataka. The distribution rights in three more areas are to be acquired by 2012. Although BSES has floated a wholly-owned subsidiary, BSES Telecom, it has affirmed that the power business will continue to be the company's focus area. About 85-90 per cent of the investment in the next 10 years will be in this business. The balance 10 to 15 per cent will be in the coal washery and telecom business. Powered by YOU MAY ALSO WANT TO READ:
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