Tata Power to venture in global markets to mitigate risks

New Delhi: Facing multiple constraints on the home turf, Tata Power is scouting for opportunities in international markets to maximise returns and minimise risks, the company's Chairman Ratan Tata has said.

In spite of robust growth in the domestic power demand, he said multiple constraints across the entire value chain have made growth in the country very challenging.

[caption id="attachment_395338" align="alignleft" width="380"] Company chairman Ratan Tata. AFP[/caption]

"Thus, your company has decided to venture in international markets that offer a greater potential for growth with the strategic intent of maximising returns and minimising risks," Tata said in the company's 2011-12 annual report.

Several issues, ranging from acute coal shortages to environmental hurdles and poor financial health of discoms, are hurting the country's power sector, which has a generation capacity of over 2 lakh MW.

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Tata pointed out that the company is actively pursuing business opportunities in other countries and hopes to increase its global footprint in the coming years.

Apart from Tata Power, he chairs boards of many other companies of the Tata conglomerate as well as the main promoter firm Tata Sons Ltd.

Later this year, Tata would be succeeded by Cyrus Mistry, the Deputy Chairman of Tata Sons Ltd.

The annual report stated that certain international opportunities are promising, as returns are predictable due to availability of timely clearances and lower risks.

Tata Power is primarily looking for opportunities in capacity addition across various geographies and distribution opportunities in certain areas, it added.

Noting that it would explore acquisition of energy resources globally, Tata Power said the "ownership of fuel resources would enable de-risking of generation capacities from escalations in fuel cost".

The company's 4,000 MW Mundra ultra mega power project in Gujarat, fired by coal imported from Indonesia, is grappling with losses due to changes in Indonesian regulations that has made the dry fuel expensive. This, in turn, has made the UMPP unviable at existing tariff.

Meanwhile, Tata Power -- which currently has an installed capacity of 6,099 MW -- earlier this year formed an equal joint venture 'Cennergi' with South Africa's Exxaro Resources.

Cennergi would develop power generation projects in South Africa, Botswana, Namibia and other African countries. In a consortium with Origin Energy and PT Supraco Indonesia, Tata Power is developing Sorik Marapi Geothermal

project in Indonesia.

The exploration phase of the project is expected to end in September 2013, the annual report noted. The company also has investments in various coal

companies in Indonesia.

Among others, Tata Power expects to commission the 126-MW Dagacchu hydel project in Bhutan -- where the majority stakeholder is the Bhutanese government -- by 2013.

PTI