KSK Energy to complete 1800 MW Chhattisgarh Proj by 2011

KSK Energy Ventures, a company with experience in developing and operating power plants, listed at Rs 210.05 on the NSE against the issue price of Rs 240 at a discount of 12.48%.

S Kishore of KSK Energy Ventures said that it is finalising tenders for 1800 mw project in Chhattisgarh. He informed that the 1800 MW Chhattisgarh Project will be completed by 2011. He also expects 5000 MW of installed capacity by 2012. He said that the additional 4000 MW capacity will come onstream during 2012-2014. He also informed that they are looking at additional equity mobilisation.

Excerpts from CNBC-TV18's exclusive interview with S Kishore:

Q: Could you give us a roadmap of this 9,200 MW that you are looking to implement by 2014. How many MW will come in from here between now and 2014?

A: We are currently at about 144 MW in terms of operation and additional 675 MW will get added in 2008 and in 2009, which is in advanced stage of construction, 135 MW will get commissioned before March 2009 and the balance 540 MW will be up and running by March 2010.

We are currently in the process of finalising the tenders for the 1,800 MW project planned in Chhattisgarh, which is the basic object of this issue and this 1,800 MW possibly is the largest private sector project in the state of Chhattisgarh; this we believe will be operational by August 2011. By 2012, considering the pipeline we expect that we would be at about 5,000 MW of installed capacity and the balance 4,000 MW will be operational between 2012 and 2014 in multiple phases.

Q: You are at 144 MW now; 675 MW will come by 2010, that’s about 800 and 1,800 comes in 2011 which works out to 2,600 MW. How is that working out to 5,000?

A: We need to take up an additional 1,800 possibly before the end of the next financial year; we should also get into financial closure mode and therefore that also will get into implementation mode.

Q: How much of your total 9000 MW have financial closure at this point time?

A: Out of the 9,200 MW, we have financial closure for about 3,000 MW.

Q: Is it a legitimate worry on the part of your investors in this kind of a financing environment where interest costs are going up substantially and equity money is difficult to come by; you might face some difficulty in arranging viable financial closure for the remaining 6,000 MW?

A: Most important point is on the debt side; we have a very interesting response from the debt side at all points in time. Close to Rs 5,200 crore debts have been raised in less than 120 days of the time of launching. Our company is into a modular kind of development. So we have 1,800 MW which is three times 600, the next three times 600 will also come in possibly at the same location. We are not finding any difficulty in terms of debt; but we want to address how to look at additional equity mobilisation.

One of the key points that we have enjoyed all through is that a good part of our equity is picked up by our equity investors in the form of captive consumers. In the 875 MW, we have an interesting combination of equity coming in both from financial investors and customers. So we expect there is a good amount of customer participation that has not been envisaged both for the current 1,800 MW under implementation and additional 1,800 MW that could come into financial closure before next year. These two in our view will possibly attract a lot of equity coming from customers and therefore would not be affected by the stock market.    

Q: What is the remaining 2,000-odd MW, which will take your capacity to 5,000 MW by 2012? Is it just a plan at this stage or is there any detail you can share with us?

A: For all our projects of 9,200 MW; 7,200 MW is based on coal as the fuel and the important point is entire 7,200 MW is backed up by confirmed fuel coal linkages and therefore it’s a question of implementing these projects. At Chhattisgarh where we are currently implementing the 1,800 MW, we are planning an additional 1,800 MW in the same location. Further we are currently planning on 1,800 MW in Orissa in a coal block called Naini which is in relationship with State Government mining company. So of this, 1,800 MW is what will go into a financial closure before March 2009 and that is what will add up to our 5,000 by 2012.