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Reliance Power

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Reliance Power Limited
Company typePublic company (BSE: 532939)
IndustryElectric utility
Founded2007
HeadquartersNavi Mumbai, India
Key people
Anil Ambani (Chairman)
Productselectrical power
natural gas
ServicesElectricity generation and distribution
natural gas exploration, production, transportation and distribution
RevenueIncrease₹18.92 billion (US$230 million) (2011)
Increase ₹7.6 billion (US$91 million)(2011)
ParentReliance Anil Dhirubhai Ambani Group
Websitereliancepower.co.in

Reliance Power Limited is part of the Reliance Anil Dhirubhai Ambani Group. It was established to develop, construct and operate power projects in the Indian and international markets. Reliance Energy Limited, an Indian private sector power utility company and the Anil Dhirubhai Ambani Group promote Reliance Power.

With its subsidiaries, it is developing 13 medium and large-sized power projects with a combined planned installed capacity of 33,480 MW.

Reliance Natural Resources merged with Reliance Power in 2010, shortly after its initial public offering.[1] In July 2014, Reliance Power acquired the entire 1,800 MW hydropower portfolio of Jaiprakash Associates for over ₹10,000 crore.[2]

Overview

The company was incorporated in January 1995 as Bawana Power Private Limited and changed its name to Reliance Delhi Power Private Limited in February 1995. Its name was changed to Reliance Energy Generation Limited in March 2004, and finally to Reliance Power Limited in July 2007.[3]

The company website identifies project sites broadly to be located in western India (12,220 MW), northern India (9,080 MW) and northeastern India (4,220 MW) and southern India (4,000 MW). They include six coal-fired projects (14,620 MW) to be fuelled by reserves from captive mines and supplies from India and abroad, two gas-fired projects (10,280 MW) to be fuelled primarily by reserves from the Krishna Godavari basin (the "KG Basin") off the east coast of India, and four hydroelectric projects (3,300 MW), three of them in Arunachal Pradesh and one in Uttarakhand.

Power projects

Rosa Thermal Power Station
Electricity transmission grid in eastern India.

Ultra mega power projects

Thermal & gas-based power projects

Order to Shanghai Electric

Anil Dhirubhai Ambani placed a single order for $8.3 billion with Shanghai Electric Group Company (SEC) for buying 36 coal-fired thermal power generation units, spare parts and related services over a 10-year period. This took the total deal size between Reliance Power and the Chinese power equipment maker over the past couple of years to $10 billion, making it the largest contract between a private Indian company and a government-owned Chinese firm.

While Reliance Power has also given a $2.2 billion deal to US-based General Electric, the agreement signed with SEC is on a different plane. The Chinese company will supply boiler, turbine and generator packages for up to 30,000 MW capacity of coal-based power at six plants, including the 4000 MW ultra mega power project in Krishnapatnam, the 3960 MW Project in Chitrangi and the 4000 MW Power Project in Tilaiya.

Loans from Exim bank

Reliance Power Ltd. signed an agreement with the US Export-Import Bank in 2010 for a $5 billion loan to finance power projects. The loan will finance 900 megawatts of renewable technologies such as solar and wind energy,[6] as well as up to 8000 MW of gas-based power generation technology, the Indian company said in a statement. This $5 billion agreement is in addition to the $917 million already approved by the Ex-Im Bank for Reliance Power's coal-fired power plant at Sasan in central India.

The agreement will allow Reliance Power access products and services at competitive rates and help create manufacturing and services jobs in the US. The loan will also enable quicker access to the bank's long-term dollar loans. Reliance Power signed a pact with the US's General Electric Co. (GE) worth INR100 billion ($2.2 billion) to implement a 2400 MW power plant. The plant will be located in the southern Indian town of Samalkot and the pact was signed during the visit of President Barack Obama.[7]

Initial public offering and controversies

On 15 January 2008, the company attracted $27.5 billion of bids on the first day of its initial public offering (IPO), equivalent to 10.5 times the stock on offer, thereby, creating India's IPO record. The upper cut off price for the bid was Rs. 450[8] The proposed IPO was to fund the development of its six power projects across the country whose completion dates are scheduled from December 2009 to March 2014.[9]

A media report suggested that, if the company’s stock price were to cross Rs. 650–700, Anil Ambani would go past L. N. Mittal to become the richest Indian.[10] "It is a reflection of world community in the future of India... Investors seem to be confident in the future of Indian economy," Indian Finance Minister, P. Chidambaram told the media about the IPO.[11]

The Securities and Exchange Board of India, which is an organisation that regulates the activity in the Indian stock market, placed some restrictions based on a complaint about the formulation of the IPO.[12] The complaint also resulted in a public interest litigation being filed against the company. However, the Supreme Court of India passed a ruling that the IPO would go ahead even if any order is passed by any Indian court against the venture.[13]

Reliance Power debuted on the stock markets on 11 February 2008. However, the markets were still reeling after the January 2008 stock market volatility, and concerns over speculation that the issue was overpriced sent the stock plummeting soon after its listing. At the end of the day, the stock traded at a value that was 17 per cent lower than its issue price of Rs. 450 .[14] Investors who were betting on the stock reaching 1.5 or even twice its issue price lost a fortune in the process. On 25 February, in an effort to mitigate investor losses, Reliance Power decided to issue 3 bonus shares for every 5 shares held.[15]

Carbon credits

On 2 February 2011 United Nations registered Reliance Power's Sasan Power Plant to be eligible for earning carbon credits followed by Krishnapatanm Ultra Mega Power Project and Tilaiya Ultra Mega Power Projects. United Nations issues carbon credits to companies which employs advanced technologies in reducing carbon emission . These carbon credits can then be sold to those companies that are emitting more than their statutory emission limits.

References

  1. ^ "Anil Ambani mulls merging Reliance Power, RNRL". Reuters. 2 July 2010. Retrieved 2 July 2010.
  2. ^ "Reliance Power shares up on Jaiprakash hydro-power Deal". news.biharprabha.com. IANS. 28 July 2014. Retrieved 28 July 2014.
  3. ^ "Reliance Power Limited: Private Company Information". Business Week. Retrieved 16 January 2008. {{cite news}}: External link in |work= (help)
  4. ^ http://www.business-standard.com/article/companies/reliance-power-commissions-third-unit-of-sasan-umpp-114032400259_1.html
  5. ^ http://timesofindia.indiatimes.com/business/india-business/Reliance-Power-starts-up-2nd-unit-of-Butibori-plant/articleshow/17866086.cms
  6. ^ "US Exim Bank to fund Reliance Power's solar expansion". The Times of India. 17 April 2012. Retrieved 22 June 2012.
  7. ^ JOHN SATISH KUMAR (8 November 2010). "Reliance Power Secures Loan, Signs Deal with GE, Others". Wall Street Journal. Retrieved 22 June 2012.
  8. ^ M.C. Govardhana Rangan, Archana Chaudhary (15 January 2008). "Reliance Power Record IPO Gets $27.5 Billion of Bids". Bloomberg. Retrieved 15 January 2008. {{cite news}}: External link in |work= (help)
  9. ^ Noronha, Paul (5 January 2008). "Reliance Power set to raise over Rs 10,000 cr via IPO". The Hindu Business Line. Retrieved 16 January 2008. {{cite news}}: External link in |work= (help)
  10. ^ Times News Network (16 January 2008). "father would have been a happy man: Anil Ambani on REPL IPO". The Economic Times. Retrieved 16 January 2008. {{cite news}}: External link in |work= (help)
  11. ^ Press Trust of India (15 January 2008). "Reliance Power IPO subscribed 10 times in 4 hrs". The Hindu Business Line. Retrieved 16 January 2008. {{cite news}}: External link in |work= (help)
  12. ^ Layak, Suman (28 December 2007). "SEBI puts curbs on Reliance Power offer". Hindustan Times. Retrieved 15 January 2008. {{cite news}}: External link in |work= (help)
  13. ^ ENS Economic Bureau (12 January 2008). "Reliance Power can go ahead with IPO: Supreme Court". Indian Express. Retrieved 15 January 2008. {{cite news}}: External link in |work= (help)
  14. ^ Hard lessons from the primary market fiasco financial scene – The Hindu
  15. ^ Reliance Power offers 3:5 bonus, share cost now Rs. 269 – DNA India
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