JSW Energy to raise Rs 8000 cr for 2 projects

MUMBAI: JSW Energy, part of the Sajjan Jindal-owned JSW Group, has initiated the process to borrow over Rs 8,000 crore to finance its forthcoming power projects in Chhattisgarh and Himachal Pradesh. The company plans to build a 1,320 megawatt coal-fired power project in Chhattisgarh and a 240 mw hydropower project in Himachal Pradesh.

JSW Energy currently has an average borrowing cost of about 11.4%. “We will raise debt for the two projects within six months,” said JSW Energy CFO Pramod Menon. The company has appointed IDBI Bank as a lead manger for the fund raising.

The newly-listed company from the JSW Group, which sells 70% of the power it generates in the open market through higher tariffs, is currently grappling with environmental issues in Ratnagiri and Chhattisgarh. A public hearing with the local populace in Chhattisgarh is scheduled for August 7.

Speaking to reporters after a board meeting called to approve its fiscal first quarter results, JSW Energy vice-chairman N K Jain said a robust business outlook has led to higher merchant power rates which has improved the company’s profitability. The company said its net profit rose more than threefold to Rs 299 crore. “The profit grew mainly due to increase in merchant power sales from new capacities,” Mr Jain added. The company sold 1.8 billion units of electricity and accounted for a net sales of around Rs 964 crore, compared to Rs 297 crore in the previous year.

Currently, JSW Energy has an operational capacity of about 1,000 mw and targets to generate more than 11,000 mw in five years, of which a major portion will be sold in the open market at spot price to boost profits, according to company officials. “With a power deficit of over 14%, we expect better prospects for merchant power sales for next three years,” said Mr Jain.

During the quarter ended June 30, JSW Energy sold power at an average merchant power tariff of Rs5.75 per kilowatt hour. Merchant power sales are when a generating company sells electricity at spot rates, compared to the traditional method of selling under a power purchase agreement. Typically, merchant power rates are higher than that sold under power purchase agreements.

JSW Energy also said that it plans to strengthen fuel supply by acquiring overseas coal mines and through long-term fuel purchase agreements. It is looking for mines in Australia and Indonesia, apart from a recent $50-million coal mine acquisition in South Africa. Mr Menon said the company has secured half of its total annual requirement of 6 mt of coal.

The Sajjan Jindal-led company also plans to expand its presence in the renewable energy space that includes hydro, solar and wind. “We are in advance stages of completing due diligence for three hydro projects of 80 to 240 mw in Himachal and Sikkim and are looking for setting up wind and solar projects in Rajasthan and Gujarat,” said Mr Menon.