Tata Power Ltd, India's third-biggest generator by market value, plans to spend Rs 18,000 crore on almost doubling generation capacity to more than 4,500 mw. Tata Power is also seeking to set up businesses overseas and is pursuing projects in South Africa and Bangladesh, Adi Engineer, a director, said in a statement to the Mumbai stock exchange today. These steps will take the Mumbai-based company "on a path of sustainable growth," he said.
Tata Power is expanding to benefit from reforms in India's electricity laws which allow private companies to sell directly to users instead of the earlier system where most of the power had to be compulsorily distributed through state-run companies. These state-owned companies called electricity boards were unprofitable and didn't pay their bills on time. India's electricity generation capacity will expand by about 40,000 megawatts in the next three years to meet rising demand, finance minister P Chidambaram said on February 28.
Electricity output needs to expand almost 60% to 200,000 mw by 2010 for India to meet its target economic growth exceeding 7% in the next 10 years. Tata Power's present total generation capacity is 2,323 mw. Tata Power has also bid for government projects to build power plants of 4,000 mw each, the statement said. The company, a part of the Tata group which has 93 companies in its fold and has revenue of $17.8 billion, is joining sister companies Tata Steel Ltd and Tata Chemicals Ltd in a $2 billion plan to make steel, fertiliser and generate power in Bangladesh.
Tata Power had been invited to participate in the bidding for a power project in South Africa, the statement said, without giving any details. Tata Power was part of five groups that had qualified to bid to build and operate two gas-fired power plants, South Africa's energy ministry said in a statement on August 23. The winners will be contracted to construct open-cycle gas turbine plants by October 2008, the ministry said in the statement released in Pretoria.