EWP, Sahara India Power Team Up to Tap Indian Power Market

Power companies ink an MOA on $9 bln joint power BOO projects within 7 years

Korea East-West Power Co. (EWP) has signed an MOA (memorandum of agreement) with Sahara India Power, a subsidiary of India's Sahara Group, on coal-fired power generation projects worth a combined $9 billion. The Sahara Group is an Indian conglomerate with its presence in media and construction businesses in India and employs approximately 1 million people. The MOA, reached in New Delhi on Aug. 16 by the two companies, calls for the joint development of power generation projects with a combined capacity of 6,000MW within seven years. The projects are enormous since 6,000MW, equivalent to six nuclear power units (1,000MWx6 units), accounts for 3.5 percent of India's total power generation capacity. EWP has been making strenuous efforts to tap the Indian power market with its high growth potential along with Vietnam and Indonesia since 2009. Its efforts have paid off. EWP and its Indian counterpart have already obtained approval from the Indian government on a project to build two power plants with a combined capacity of 1,200MW (600MW x two units) in the Indian state of Orissa, the first phase of the MOA project. EWP has agreed on the details of the first phase project and other joint projects the two will carry out during the seven-year period.
The first-phase project in Orissa has been going well, as power purchase agreements (PPAs) have been signed to sell 14 percent of the total power production from the project. About 809,369 square meters of land parcels, 21 percent of the total site needed for building the two plants, has also been already secured. The money to purchase the site has been paid to the state government and the remaining land parcels will be acquired via Industrial Infrastructure Corp. (IDCO). The project is scheduled to break ground sometime next year, since the process for purchasing the site is to be finished by late October and the PPA portion is expected to reach 70 percent. EWP plans to complete the project by late 2016 and recoup its investments by selling electricity for 25 years. In a related development, EWP President Lee Gil-gu held a series of meetings with power and coal vice ministers of India's central government as well as Indian utility company representatives and asked for their cooperation in the project. EWP and Sahara India Power agreed to jointly carry out additional power plant projects with the remaining capacity of 4,800MW, EWP officials said. Lee also met with the Orissa state governor and energy minister as well as power transmission company and IDCO officials and pitched EWP's technological prowess and discussed ways of materializing businesses.
EWP President Lee said EWP's full-scale entry into the Indian power market has secured opportunities to yield profits on a long-term and stable basis.
The Sahara Group established Sahara India Power to partake in the Indian power industry, which is growing at a fast pace, and Sahara India Power is undertaking the coal-fired power project in Orissa as the first undertaking since its establishment. Recognizing EWP's high-tech power plant operation and project development capabilities, Sahara India Power has launched joint projects with the Korean utility company. Selecting as its business partner EWP, which is financially sound and has developed and operated supercritical power plants with home-grown technologies, Sahara India Power signed an MOU with EWP on the 1,200MW coal-fired power development project in July 2010.
INDIAN POWER MARKET WITH HUGE POTENTIAL - India ranks sixth in the world in terms of power consumption with a 3.4 percent share of the world's total electricity consumption. Currently, India depends heavily on thermal power plants for electricity production with a 64.6 percent share of the nation's total electricity production, particularly by coal-fired power plants. India's electricity shortage rate ― the ratio of power supply versus demand ― has averaged 9.6 percent during the period between 2005 and 2011, so if there is infrastructure growth, the Indian power industry is forecast to emerge as the world's largest market.
EWP's overseas business was almost nil until October 2008 when CEO Lee took office. Since then, EWP chalked up 5.17 billion won and 17.8 billion won in earnings from the overseas business sector in 2009 and 2010, respectively. The utility company aims at posting 500 billion won, accounting for 10 percent of its total sales, from the overseas business sector for this year. EWP is undertaking 10 projects in eight countries and is seeking to partake in an additional 13 projects in 12 countries. nw

Korea East-West Power President Lee Gil-gu shakes hands with Sahara India Power CEO Ashok Bhargava after signing an MOA on power projects in India in New Delhi on Aug. 16.

Photo on Courtesy of EWP