The Hindu Business Line : Reliance Energy puts three power plants on the block

LEADING power producer and distributor Reliance Energy Ltd (REL) is selling its interests in three electricity generation plants that have a combined capacity of about 433 MW, it is learnt.

REL has appointed a leading investment banker to evaluate and sell its interests in BSES Kerala Ltd, BSES Andhra Power, and Reliance Salgaocar Power Company Ltd (RSPCL), a reliable source told Business Line.

The source said that October 7 was the last date for prospective bidders to submit non-binding financial bids. He added that the company has also put a condition that interested parties have to bid for all the three plants.

After the sale, the company is expected to operate only large generating stations such as its 500 MW plant at Dahanu near Mumbai and the 3740 MW station coming up at Dadri in Uttar Pradesh.

"Basically, the company is looking to move out of small-sized generation units and plans to focus on large generation and distribution projects similar in size to its proposed Dadri plant," the source said.

When asked to confirm whether the development was true, a company spokesperson said: "As a matter of policy, Reliance Energy does not comment on speculation."

REL, or the erstwhile BSES, holds 83 per cent equity interest in BSES Andhra Power Ltd, the joint venture company that runs the 220 MW plant at Samalkot in Andhra Pradesh, and a similar stake in BSES Kerala Power Ltd that owns the almost-idle 165 MW power plant near Kochi. It had also acquired the entire equity stake in RSPCL that operates a 48 MW naphtha-based combined cycle plant in September 2003 for Rs 25 crore.

After the Reliance group acquired BSES, one of the first steps the company undertook was to announce the de-subsidiarisation of nine of its arms, which included the Kerala and Andhra generating companies.

A banker familiar with the development said that the group has not been happy with the performance of these companies for a while now. High naphtha prices have ensured that the Kerala plant has been lying more or less idle for the past several months, according to officials of Kerala State Electricity Board, the company's sole customer.

The board would not buy electricity from the plant because of merit order dispatch norms, which insist that expensive power should be purchased last.

Even though the Goa plant also runs on naphtha, the company has power purchase agreement with the State Government that ensures sale of at least 24 MW.

The Samalkot plant, the source said, has been unable to find a regular supply of liquefied natural gas, because of which it has been running at a low plant load factor.