JSPL gets category A power trading licence

Jindal Steel & Power Ltd (JSPL) has been issued a category A electricity trading licence by the Central Electricity Regulatory Commission (CERC). The company expects to generate income to the tune of Rs 2,000 crore by 2008-09 from this new line of business.

A group company, Jindal Power Ltd (JPL) is currently setting up a 1,000 mw power plant in Chhattisgarh at a cost of Rs 4,200 crore which is expected to attain financial closure in 2007-08.

JPL and JSPL have entered into an agreement that will allow the latter to trade in power produced by the former. The licence entails JSPL to trade in power in the whole of India except in Jammu & Kashmir.

The company for now has fixed the price of power at Rs 2 per unit. Sushil K Maroo, whole time director of JSPL, said, "This is a thermal power plant run with locally available coal. Except for normal tax related price increases, we do not foresee any major price fluctuations."

Around 350 mw electricity from the new unit will be used by JSPL and the balance is expected to be sold to state electricity boards and industrial units in that locality. Demand for power in the region is expected to go up after the new industrial estate is set up by JSPL in Chhattisgarh.

The new industrial estate is expected to attract power intensive units such as ferro-alloy plants and induction furnace units. The industrial estate is expected to attract investments to the tune of Rs 1,500 crore.

The equipment for the new plant will be supplied by Bharat Heavy Electricals Ltd. "We have placed order worth Rs 1,800 crore with BHEL and an advance sum of Rs 150 crore has already been paid to them." The plant will be built by JPL with technical support from JSPL, he added.

"Since we are new to this business of power trading, we have been given A category licence, which entails us to sell up to 100 million units annually. Going forward, we plan to upgrade this licence to a D category, which is the highest you can get," he said.