Reliance Power will hold 51% stake while the Japanese firm will hold 49% stake in the JV
Reliance Power has entered into a joint venture with power utility JERA of Japan to set up a 750 MW gas-based power project (Phase-1) at Meghna Ghat in Bangladesh. Reliance Power will hold 51% stake while JERA will hold 49% stake in the joint venture.
The agreement includes the power purchase agreement (PPA) and land lease agreement with the Bangladesh government for the power project, gas supply agreement with Titas Gas, a subsidiary of Petro Bangla, and implementation agreement with the Bangladesh’s ministry of power, energy and mineral resources. The project will be set up within 36 months of signing the agreements.
K Raja Gopal, CEO of Reliance Power, told Financial Express, “The company will have a total nine month period for financial closure, which will include three month of grace period. Once the financial closure is done, the real work on ground will start. In the next few weeks we will sign the equipment supply contract, which is the major component of the project.”
The project is likely to cost around `5,430 crore or $750 million. “We are working hard on financial closure and also evaluating the earlier sanctions. If we get a better proposal, we will go for that,” said Raja Gopal.
Reliance Power will relocate one module of equipment procured from an original equipment manufacturer for its Samalkot plant in Andhra Pradesh for the Phase-1 project in Bangladesh. The transaction will result in debt reduction for Reliance Power of `835 crore or $116 million payable to US-Exim.
Reliance Power had taken $500 million loan from US-Exim and has already paid $150 million, while the remainder will be paid over the next three years, said Raja Gopal. Reliance Power’s total debt as of March 31, 2018 stood at `28,000 crore.
Anil Ambani, chairman, Reliance Group of Companies, said, “This joint venture project will give a tremendous boost to the economic and industrial growth of Bangladesh and will enhance the energy security of the country with clean, green and reliable LNG based power. We are excited to be part of the growth story of Bangladesh in partnership with JERA.”
Satoshi Onoda, president, JERA, said, “Together with Reliance Power, JERA will realise a stable power supply and contribute to sustainable economic growth in Bangladesh.”
The project will represent the largest Foreign Direct Investment (FDI) in the power sector in Bangladesh, and shall cater to the country’s rising needs for power, contributing to Bangladesh’s goal of energy security, the company said.