JSW Steel plans three power plants

Leading domestic steelmaker JSW Steel is seriously planning to diversify into the commercial power business.

The company plans to invest Rs 12,000 crore in the next three years to set up three new power projects totalling to 2,800 mw in Maharashtra, Rajasthan and Karnataka, said MVS Sheshagiri Rao, director, finance, JSW Steel.

JSW has plans to set up a 1,200 mw power plant in Maharashtra (Ratnagiri), 1,000 mw plant in Rajasthan (Barmer) and a 600 mw plant in Karnataka (Vijayanagar).

The Vijayanagar and Ratnagiri projects will be coal-based and the Barmer project which lignite-based, which will be arranged by the Rajasthan government.

"Governments of Maharashtra and Rajasthan have in principle agreed to the projects. The signing of memorandum of understandings (MoU) and the necessary clearances from the respective state governments, like land acquisition and environmental clearance, will be taken in a few months. As far as Karnataka is concerned, we already operate a captive power plant, and there is no need to take fresh clearances or permission. The power plants are expected to be commissioned in phases in the next three years," said Sheshagiri Rao.

The investment will be made by JSW Energy, a subsidiary of the company, through three special purpose vehicles (SPV) set up for the purpose, and will be a mixture of debt and equity.

JSW Energy already has a capacity of 260 mw and sells all the poer to third parties. In addition, the company has captive power plants of 340 mw capacity.

To support the GDP growth of 8 per cent, India needs another 70,000-90,000 mw power. Right now, India has a capacity of 1,16,000 mw, which is short of the demand. JSW is seeking to cash in on this demand.

The company has miniscule coal reserves to support its fuel requirement. "We are on the lookout for thermal coal reserves across regions like Africa and Indonesia," said Rao.

Recently, JSW Steel entered into a Memorandum of Understanding (MoU) with a Mozambican party to obtain mining licences and operate in the country.

As per the MoU, JSW Steel can conduct legal and technical (geological) due diligence studies within 28 weeks to conclude the availability of coal, quality of coal and reserve potential.