CESC Ltd plans 1,000 mw unit in the Maharashtra

In a parallel development the company has decided to raise $50 million through issue of securities to either existing shareholders or new investors.

The amount would be used to fund the company's 250 mw power project at Budge which would require a total investment of Rs 1,000 crore.

"The total requirement would be finaced through a combination of equity and loan, where Rs 300 crore would be in the form of equity and Rs 700 crore in the form of loan," said Sumantra Banerjee, managing director, CESC Ltd.

Meanwhile, sources close to the development at Maharashtra said that the company was looking at the possibility of setting up a 1,000 mw power plant in the state as part of its plan to move to other areas.

Banerjee said, "We have contacted the Maharashtra government and have written to them expressing our intent to enter into talks with them for the proposed unit."

"Our officials also visited the state recently for looking at the possibility of setting up a power plant there," he added.

According to the sources, CESC was looking at the possibility of setting up a 1,000 mw power plant, which would require an investment of Rs 4,500 crore if the thumb rule of Rs 4.5 crore per mw is considered.

Sources close to the MSEB said that it has received calls and communications from investors and CESC has shown keen interest to invest in the state. The details would be worked out in time, they added.

In order to start power generation, CESC would have to enter into an memorandum of understanding with the MSEB for power evacuation, if it does not set up a distribution network of its own.

The Maharashtra government, which is struggling to tackle the ever-increasing peaking shortfall in the state had planned to add 5,000 MW capacity in the next five years and had invited private players to set up plants in the state.

The state was suffering from a shortfall of 2500MW. Three other companies along with CESC also have shown interest in setting up a base in Maharashtra. These are Jindal Thermal Power Company, Tata Power Company (TPC) and Essar Power.

This comes in the wake of the Maharashtra government's new policy, which was recently announced by state energy minister Dilip Valse Patil, to encourage the private sector's participation in power generation. In '00, the state government had signed a number of MoUs to set up power projects in the state. However, none of them materialised.

CESC had also signed an MoU with the government of Rajasthan which did not get through.

MSEB has already signed an MoU with Reliance Energy, Tata Power (TPC), Essar Power and Central India Power Company (Cipco) of the Ispat group. The MoUs envisage setting up of around 8000 MW of power generation capacity at an estimated investment of Rs 32,000 crore.

Tata Power, Cipco and Essar, as per the MoU, would each seek to set up a 1,000 MW power plant. TPC plans to develop a 1,000 MW coal-based project at Vele in the Raigad district.

The success of these new power projects would once again rest on the ability of the MSEB to convince the industrial houses about its ability to pay for the power.