Sterlite Industries (India) setting up new power projects at Jharsuguda and Lanjigarh

Sterlite to invest Rs 20,000 cr
Economic Times, July 10, 2009

NEW DELHI: Sterlite Industries (India), the country’s largest private sector power producer, is planning to invest Rs 20,000 crore over the next one
year to create additional capacity of 4,500 mw. This will also mark the company’s foray into commercial power generation.

The company, part of the Anil Agarwal-promoted $6.5-billion Vedanta Group, is setting up new power projects at Jharsuguda and Lanjigarh in Orissa with a combined capacity of 3,150 mw. It also plans to set up a 160 MW project at Rajpura Dariba in Rajasthan and another 1,200 MW project at Korba in Chhattisgarh.

The new initiative would be rolled out by Sterlite Energy (SEL), a 100% subsidiary of Sterlite Industries. SEL will function as the commercial power generation arm of the company.

“We are excited to enter the commercial power business, as we start our 2400 MW independent power project (IPP) at Jharsuguda in Orissa. We can leverage our strength of building and operating power plants in India and also benefit from our mining experience,” Vedanta Group chairman Anil Agarwal told ET. “About 50% of the new capacity is expected to be sold on a commercial basis, while the balance would be used for the captive metals business,” Mr Agarwal added.

Sterlite, with its five power plants in Orissa, Chattisgarh, Tamil Nadu and Rajasthan, has an installed capacity of 2009 mw. Currently, most of this capacity is used for captive businesses.

With the setting up of the new power projects, the total installed capacity is expected to go up to 6,500 mw by next year and the total investment would reach Rs 30,000 crore. The company has already invested Rs 9,000 crore in its power venture.

“The entire power sector capacity addition has been put on the fast track. By 2009-end, 2500 mw of proposed 4500 mw additional capacity would be installed. The first unit of 600 mw of 2400-mw power plant in Orissa would become operative by September-October, 2009,” said a senior Sterlite official, who wished not to be named.

A consortium of 19 lenders led by the State Bank of India have already committed a term loan of Rs 6,150 crore to SEL for the 2400-mw power project at Jharsuguda. This would be the largest syndicated term loan facility arranged for the group from the Indian debt market for a single project.

The project envisages a total capital outlay of Rs 8,200 crore, which is proposed to be funded through a combination debt of Rs 6,150 crore (both Indian rupee and foreign currency loans) and Rs 2,050 crore of equity. The entire equity component has already been contributed by Sterlite.

Besides being world’s largest integrated and low cost Zinc producer, Vedanta is amongst the top 10 Copper and Aluminium producers in the world. It has also become India’s largest private sector producer-exporter of Iron ore through acquisition of Sesa Goa.