Reliance Energy: Research meeting extracts - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Reliance Energy: Research meeting extracts

Mar 3, 2006

We had recently met up with the management of Reliance Energy to gain a first hand understanding of the company’s path towards becoming a larger player in the Indian power sector. We also gained insights on the developments in the power sector and the ground realities therein. Here are the excerpts from the same.

Key extracts
Electrical energy segment The management has outlined its mega expansion plans, which basically involves rapid strides in the generation sphere of the power sectors. Here are the major generation projects that the company is currently working on.
  1. A 3,000 MW gas based power project in Uttar Pradesh (one phase of the larger project of 5,000 MW), which is estimated to cost the company Rs 120 bn and that will come on stream in the next three years. Notably, this will a part of the world’s largest single location gas-based power generation plant. The company will further add 2,000 MW to this capacity, but that will come at a much later date. Reliance Energy will source natural gas, the feedstock, from its erstwhile parent, Reliance Industries’ Krishna Godavari reserves. The price of gas is still to be worked upon. This capacity will supply power to Reliance Energy’s distribution ventures in Delhi (BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd), which face peaking requirements of 2,400 MW currently. Peaking requirements in this region is expected to rise to 3,000 MW in the next five years, thus indicating the requirement of the company to add this capacity.

  2. A 1,400 MW gas-based power generation project in Maharashtra, at a cost of around Rs 56 bn. This will be to meet the peaking requirement in the Mumbai circle, which forms around 80% of the company’s total power sales. As reported by the management, the current peaking requirement in Mumbai is to the tune of 1,200 MW. Out of this, while the company takes care of 500 MW through its Dahanu thermal plant, the remaining requirement is being sourced from Tata Power at the rate of around Rs 2.7 per unit. Notably, this is almost 67% higher than the company’s cost of Rs 1.6 per unit from the Dahanu plant. The latest capacity expansion will thus reduce the company’s average cost of power supplied, as and when it comes on stream.

  3. A 12,000 MW coal-based power generation project in Orissa, in phases, at a cost of around Rs 480 bn. This would be towards meeting the requirements of the company’s distribution companies in the state. The management has reported that the Orissa distribution venture, after facing much bureaucratic hurdles, is likely to break even in the near future.

To Read the Full Story, Subscribe or Sign In
To Read the Full Story, Subscribe or Sign In

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Aug 14, 2020 11:23 AM


  • Track your investment in RELIANCE INFRA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks