Nalco to hold minority stake in NPCIL venture

KOLKATA: National Aluminium Co (Nalco) will hold a 39-49% stake in its proposed greenfield nuclear venture in partnership with Nuclear Power Corporation of India (NPCIL). The move has been discussed by the boards of both companies. The two partners are likely to get into detailed deliberations next month regarding the formation of a brand new JV entity, and also freeze its shareholding and equity base.

���It has been decided that NPCIL will be a majority partner, while Nalco will have a minority shareholding in the nuclear power company,��� Nalco���s director (Finance), BL Bagra told ET. As per discussions, the two potential partners ��� NPCIL and Nalco ��� have loosely agreed to hold between 51-61% and 39-49% stakes respectively. The exact shareholding pattern will be finalised shortly.

���Going by the present thumb rule of Rs 8-9 crore per megawatt in this sector, the power project would require an investment of roughly around Rs 8,000-9,000 crore. The project is likely to be funded through a debt-equity ratio of 2:1. Nalco���s share of investment would thus be roughly around Rs 1,500 crore,��� Mr Bagra added.

Last week, Nalco announced plans to enter the civilian nuke power business by setting up a 1,000 mw unit. The move stems from the company���s experience last year when metal prices plunged in the aftermath of the economic slowdown, and is aimed at de-risking Nalco���s aluminium business from wild swings in commodity cycles.

Explaining the rationale behind Nalco���s move into nuclear power generation, the official said: ���The last recession had hit us badly. More significant, it has made us realize, the need to de-risk our business from vagaries of the global commodity cycle.���

Since demand for power is expected to remain strong, the business will bring stability to our overall revenue stream even in a downturn when metal demand is weak.���

The project may mark Nalco���s foray into nuke power but will not be a diversification into power generation, per se. The country���s largest aluminium company already generates some 960 mw of captive power with plans to go up to 1,200 mw, out of coal-fired power plants at Angul, in its home state of Orissa.

The two companies have thus planned to set up a joint team for operations of the new company. ���We have people skilled in power plant operations. While NPCIL is likely to responsible for fuel and reactor operations, our men can take charge of boiler operations and in evacuation of the power,��� a company official said.