Vedanta Group to bid for UMPP and coal blocks

The UK-based Anil Agarwal-led Vedanta Group has said that it would bid for the Ultra Mega Power Projects (UMPP) and coal blocks in India, when the government puts them on auction and is also willing to acquire the government's remaining equity in Balco and Hindustan Zinc Limited.

In its ambition to become the world's fifth largest metals and mining group, Vedanta had said in March that it would invest Rs70,000 crore in India by 2011-12, (See: Vedanta investing Rs70,000 crore for expansion in India) of which, it wants to invest a large chunk to create 11,000 MW power generation capacity in India.

Since the country is facing a shortage of power by approximately 78,000 MW, the Vedanta Group, armed with a cash surplus of Rs30,000 crore, wants to be involved in the bidding process for the UMPP as and when the government decides on auctioning it.

Last week, Sterlite Industries, the Indian mining flagship of Vedanata Resources, had raised about Rs7,200 crore ($1.5 billion) in ADRs to part finance its power generation plans and other planned capex programmes. The company raised $500 million from parent Vedanta and $1 billion through institutional investors. (See: Sterlite Industries raises $1.5 billion in ADRs to part-finance power projects in India)

The company is setting up two commercial power plants at Jharsuguda in Orissa and at another location in Punjab. The Jharsuguda plant has a capacity of 2,400 MW while the Punjab plant will generate 1,980 MW. The total investment is estimated to be in the region of Rs15,000 crore.

India's current generation capacity is 149,391 MW and a peak hour deficit of 12 per cent due to the huge surge in demand from industrial and retail consumers.

The government plans to add 78,700 MW during the five years to March 2012 to meet this demand. According to estimates India's annual growth rate of 8 per cent can be maintained only through addition of 20,000 MW generating capacity every year.

The company has also decided to bid for coal blocks as and when auctioned by the government and will be talking with the finance minister Pranab Mukherjee this month on acquiring the remaining equity in Balco and Hindustan Zinc Limited.

The group had acquired a 51-per cent stake in Balco at Rs551 crore and 64 per cent stake in Hindustan Zinc for over Rs750 crore during the tenure of the NDA government. The government holds 49 per cent in Balco and 29.5 per cent in Hindustan Zinc.