CLP Holdings Ltd, Hong Kong's biggest power producer, is planning to bid for large coal-fired plants in India and may sell shares in its local unit to fund projects to reduce blackouts in the world's second-most populous nation. Jerome Favre / Bloomberg News

Utility firm may form partnerships if it wins contracts

CLP Holdings Ltd, Hong Kong's biggest power producer, plans to bid for large coal-fired plants in India and may sell shares in its local unit to fund projects to help reduce blackouts in the world's second-most populous nation.

The company may form partnerships if it wins contracts to build the plants known as ultra mega power projects, Rajiv Ranjan Mishra, managing director of CLP India Pvt, said by telephone from Mumbai Tuesday. Mishra reiterated that the unit, which operates gas- and wind-based generators, may consider selling shares to fund future investments.

Billionaire Anil Ambani's Reliance Power Ltd and Tata Power Co, a unit of India's biggest industrial group, have won four of the nine ultra mega projects, each with a capacity of 4,000 megawatts, that India plans to build as economic growth drives electricity demand. One plant would cost about 160 billion rupees ($3.4 billion) to build, Mishra said.

Bids for two such plants in Orissa and Chhattisgarh states are scheduled to close on September 30 and November 8, respectively.

"This is a good move for shareholders of CLP Holdings to the extent that the company can execute the projects," said Michael Parker, a Hong Kong-based analyst with Sanford C. Bernstein & Co who has a "market perform" rating for the stock. "India is a very competitive market for power companies."

CLP Holdings shares rose as much as 1.5 percent in Hong Kong Wednesday.

CLP India may sell shares to fund new investments exceeding 50 billion rupees, Mishra said, without giving details of how much money the company plans to raise and the timeline for the proposed initial public offering.

A share sale is one of various options under consideration to finance the Indian operations, Winifred Wong, public affairs manager at CLP Holdings, said in September last year.

The unit of CLP, formerly known as China Light & Power Co, has spent 100 billion rupees on projects in India and is constructing a 1,320 megawatt coal-fired power plant at Jhajjar in the northern state of Haryana.

The utility has invested in power projects on the mainland and in Australia, Vietnam and Taiwan to offset declining earnings in Hong Kong. About 44 percent of CLP's revenue was from overseas in 2009, compared with just over a quarter of sales in 2005, according to data compiled by Bloomberg.

CLP India plans to spend 40 billion rupees to more than double capacity at its 655-megawatt, gas-fired plant at Bharuch in Gujarat state after the government allocates additional supply of the cleaner-burning fuel, Mishra said.

The unit has been shortlisted to build two electricity transmission networks in the country, he said, without giving details.

India's generation capacity was 164,509 megawatts as of August 31, according to the website of the country's Central Electricity Authority. Reliance Power won bids for three ultra mega power projects and Tata Power is building one.

Bloomberg News

(HK Edition 09/16/2010 page3)