Saturday, April 3, 2010


■ Developing the largest private sector power generation portfolio
Reliance Power (RPWR) is developing the largest private sector generation portfolio in India with aggregate capacity of 33GW(market share of ~11% by FY18E) supported by fuel linkages of 4BT.

■ Commercializing the surplus coal reserves
RPWRhas been allotted three coal mines with combined reserves of 700MT for the Sasan Ultra Mega Power Project (UMPP). It would have surplus of 336MT, which it intends to commercialize by developing another 3960MW project in Chitrangi. It has already tied up 1241MW with MP Power Transmission Company at a tariff of Rs2.45/kwh. Our combined valuation of Sasan and Chitrangi projects is Rs66/share.

■ Tilaiya coal blocks can support15000MW
RPWR has been allotted captive mines with reserves of 1.2BT for the Tilaiya UMPP. This project would require only 349MT coal over 25 years. Thus, the company would have surplus coal reserves of 851MT that can fuel additional capacity of 11000MW.We have conservatively factored in development of only3960MWfrom surplus coal reserves.

■ Financial closure risks being overplayed
RPWR has already achieved financial closure for 5460MW coal-based capacity.We believe the risks to financial closure have been overplayed because two key prerequisites for financial closure arewell in place: 1) fuel linkages (available for 100% of the balance capacity of 17120MW); and 2) power off-take agreement (for 9201MW).

To read the full report: RELIANCE POWER