• FEBRUARY 28, 2000

BSES to set up thermal power plant

BSES plans to invest Rs 22.8 bn in setting up a 500 mw thermal power plant at Nandgaonpeth (Amravati) in the coal rich Vidarbha region. BSES proposes to transmit power generated from this project to the Mumbai suburban district through the Maharashtra State Electricity Board's (MSEB), 220 kv transmission line.

BSES Ltd a power distribution and generating company reported a turnover of Rs 23.5 bn for FY99. Earlier BSES was only a power distribution company supplying power to the northern suburbs of Mumbai. However now it has expanded its base outside Mumbai district by tying up for projects in other states.

The capital expenditure for the Amravati project will be to the tune of Rs 18.6 bn. In addition to this BSES has agreed to pay wheeling charges to MSEB. They plan to use coal as the major fuel for this project and liquid diesel oil will be used as an alternative fuel. The company would require 2 million tonnes of coal per annum for their power plant. They are keen to acquire this from the coal mines situated nearby to the power plant in the adjoining Wardha Valley.

It proposes to set up this project on 333 hectares of land which is already acquired by the state run Maharashtra Industrial Development Corporation. The company has also selected 370 hectares of adjoining area for the discharge of coal ash. This entire investment is to be met by BSES through its internal sources.

BSES continues to be bullish on its expansion plans despite the fact that the Maharahstra government is yet to clear its 495 mw Naptha based power project at Saphale in Thane.

Some of the other new projects of BSES includes BSES Kerala Power, which is a joint venture with the Kerala State Industrial Development Corporation in which BSES has a 80% stake. BSES Kerala Power has commissioned all the three units of the 165 MW naptha-based power station at Kochi. BSES Andhra Power Limited, a subsidiary of BSES is making satisfactory progress on civil works.

Another project, BSES TeleCom (BTL) which is a subsidiary of BSES has got a license from DOT to take up the business of an internet service provider. This is to be launched in Mumbai shortly. BTL has alongwith National Grid International participated in a tender floated by the Maharashtra State Electricity Board for developing fibre optic backbone on the transmission system of Maharashtra State. BTL is implementing the first phase of Optical Fibre network linking all the 45 receiving stations of the company.

Market View:
BSES has received a mixed response from the market. It has been rated a "SELL" by some analysts as earnings growth from its main business is not very attractive and its Kerala joint venture is unlikely to show any benefits over the next three years. However some analysts who are bullish on internet companies have rated BSES as a "BUY" due to its decision to become an internet service provider. Value investors continue to like the utility business due to its steady revenue stream.

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