TPC may lose to rival in bid for Sri Lanka plant

March 30 | Updated: Mar 31 2005, 05:30am hrs
Tata Power Ltd, Indias third-biggest generator by market value, may lose out to the countrys largest state-owned utility, National Thermal Power Corp (NTPC), in a bid to invest in a $400 million power plant in Sri Lanka.

Sri Lanka wants NTPC, which produces a fifth of Indias electricity, to build the coal-fired plant because the project is backed by the governments of the two countries, energy minister Susil Premajayantha said in a telephone interview in Colombo yesterday.

Were interested because it is a government-to-government deal and we will go ahead with that, Premajayantha said. Electricity demand in Sri Lanka, a country of 20 million people, is expanding 8% a year as its economy expands after a cease-fire was signed three years ago, ending a two-decade civil war. The delays in opening the power market to private companies following a change in government last year may prompt Tata Power to switch investment to Bangladesh, Iran and other areas of the Middle East, N Suresh, business development manager, said in an interview in Mumbai. There are always going to be challenges when a company wants to expand outside its home base, said Sanjay Sinha, who manages about $600 million at UTI Asset Management Co in Mumbai. UTI has 900,000 Tata Power shares, according to Bloomberg data. Tata Power has been waiting since December 2003 to build a 300-megawatt plant in Sri Lanka, Suresh said. We are already looking at projects elsewhere, he said. If the government gets back to us soon, we will still be interested, but if its going be next year, I cant say.

NTPCs plant will initially generate 300 megawatts and reach full capacity of 900 megawatts as demand grows, Premajayantha said. The plant will be located north of the capital, Colombo.

Tata says it plans to build its facility on Sri Lankas southeastern coast at Hambantota.

Tata Power plans to double its 2,300-megawatt capacity in five years, partly by building plants overseas. The company is vying with five other utilities for a 1,000-megawatt gas-fired plant in South Africa, it has said.

Bloomberg