Tata Power Company and a Norwegian firm, SN Power, plan to invest Rs. 15,000 crore over the next five to eight years to develop hydro-power projects in India and Nepal.
The two utilities on Friday announced an exclusive partnership with an aim to have 2,000 MW under construction or operation by 2015 and a total of 4,000 MW by 2020, a Tata Power company official said.
“We aim to have 2,000 MW by 2015 under construction or operation. Each mega watt in hydropower costs us anywhere between Rs. five to eight crore, so we will invest Rs. 15,000 crore over the next five to eight years,” Tata Power Company, Executive Director, Finance, S. Ramakrishnan, told reporters here on Friday.
Each project would be developed through a special purpose vehicle (SPV) and the two partners would have equal say in decision-making and execution of projects.
Tata Power and SN Power would equally inject Rs. 4,500 crore through equity as well as third party funding if a local company or government is roped in.
The SPV would borrow the rest from international lenders like the International Finance Corporation (IFC) and the Asian Development Bank (ADB).
“We would be able to raise financing through international lenders, which would help enhance the status of the project,” SN Power, President and Chief Executive Officer, Oistein Andresen, said.
Mr. Ramakrishnan, however, said the fund-raising would not begin before the next one year.
The partners are also considering co-development of the Tamakoshi 3 project in Nepal to which SN power holds licence rights.
“The Tamakoshi 3 project is a 600 MW project. The feasibility is being looked at but it will take time to develop,” TPC’s Executive Director, Strategy and Business Development, Banmali Agrawala, said.
Besides, Tata Power and SN Power will also establish a jointly-owned services company in India, which will provide each project with world-class technical and managerial expertise.
The SPV may sell the electricity on a merchant basis or by signing power purchase agreements (PPA).
Tata Power is the country’s largest private power producer with a total installed capacity of 2,900 MW. It has 477 MW worth of hydro power projects in Maharashtra’s Western Ghats apart from having a presence in Bhutan through its 114 MW Dagachhu Hydro Power Project.
Norway-based SN Power is primarily a renewable energy company and has about 950 MW of total generation capacity.
In India, the company is present through its investment in Malana Power Company, which owns an 86 MW plant, the 192 Allain Duhangan hydropower project under construction and a 200 MW greenfield project at Bara Bangahal.