Tatas look for Africa plug-in
The Telegraph — May 23, 2005

The Tatas are considering an entry into the power generation business in South Africa through Tata Power Company. This will be the second overseas foray by the Tatas in power. The group has signed a letter of intent with the Bangladesh government to set up a 1,000-MW plant. Sources said Tata Power is evaluating the investment opportunities in South Africa. The Tatas have already tested the South African markets by launching cars - the Indigo and the Indica - from the Tata Motors stable.

Tata Power is willing to put in more than Rs 10,000 crore over the next four to five years in generation and distribution and is also looking at acquisitions in India. The South African government opened up the power sector in December 2004 and invited independent power producers to register expressions of interest in building, owning and running two power stations to meet the country's growing energy demands. The new plants, expected to cost Rs 4,062 crore, will be fully operational by 2008.

The entry of independent power producers is aimed at offering competition to power utility Eskom, which currently produces 95 per cent of South Africa's electricity. The other objective is to reduce tariffs, already among the cheapest in the world. Sources said the Tatas have not yet decided on investing in South Africa. A market survey and data collection are currently being done before preparing a feasibility report. Back home, Tata Power has approached the Central Electricity Regulatory Commission for distribution licences in Andhra Pradesh, Karnataka, Gujarat and Uttar Pradesh.

The company has also approached the state electricity boards (SEBs) in these states for distribution franchisee under the provisions of the Electricity Act, 2003. Sources said Tata Power's experience in distribution in partnership with North Delhi Power Limited has encouraged the company to approach SEBs in other states for distribution business. The company is waiting for the power reform process to begin in several states. One of the ways in which it intends to do that is by forging private-public partnerships, they added.