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London-based OPG Power Ventures Plc may be a small player in India's power sector, but claims to have put in place a unique business model that shields the firm from uncertainties in the sector.
“The way we have designed our plants and selected the locations, we are not dependent on any one type of fuel. We have kept flexibility in our technology and strategy,” Mr Arvind Gupta, Managing Director, OPG told Business Line .
It has installed equipment that can process coal with 40 per cent moisture.
Currently, OPG has coal demand of one million tonnes per annum. “We are importing high-moisture Indonesian coal that is easily available and cheap,” Mr Gupta added.
High moisture
OPG claims that coal sourced from Mahanadi Coalfields in central India would cost same as imported high-moisture Indonesian coal which lands in Chennai. So, it can breathe easy even when domestic supplies are not available.
The company is targeting 1,250 MW operational capacity by 2015. Currently, OPG runs a 77-MW coal-fired unit in Chennai. It is commissioning another 537 MW in Chennai and Kutch. All these coal-based projects are expected to be in 2012 and 2013.
Another important issue is that OPG sells power only to industrial consumers.
It is hoping to expand its portfolio into cities that have large numbers of industrial consumers with a minimum 5,000-6,000 MW demand.
Generation costs
“Our generation cost is around Rs 3.50 per unit and the end consumer tariff will be more than Rs 4.50 a unit. We sell 51 per cent of the power generated to industrial consumers. The remaining is given to power trading exchanges,” Mr Gupta said.
OPG's power projects are funded in both equity and debt.
“The equity is poured in through foreign institutional investors. The largest shareholder is M&G Investments, followed by Legal & General. Debt is financed through loans from Indian banks,” said Mr Gupta.
OPG Power Ventures PLC is listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
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