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Lanco Infratech eyes Indonesian power project

20 Aug 2010 Evaluate

Lanco Infratech has partnered with Indonesian coal mining company Bukit Asam to bid for a 600 megawatt power project, according to sources. Indonesian state-owned electricity firm PT Perusahaan Listrik Negara (PLN) has sought bids to develop the coal-based power project in southern Sumatra on a build-own-and-operate model, with a concession period of 25 years. The approximate capital cost of the project is Rs 3,500 crore. Bukit Asam, a listed company on the Indonesian Stock Exchange, is a leading coal miner. The state-owned mining company also invests and maintains port facilities along with power projects.

The increasingly competitive domestic electricity market is prompting Indian utilities to look at international opportunities. Until now, power producers had assured returns where they could set-up a project and get 16 per cent return on equity. From 2011 onwards, distribution companies have been mandated to procure incremental power only on a competitive bidding basis. Power companies have to competitively bid even to supply power, which means the assured return on equity concept will not hold true. It makes sense for companies to go for projects in countries where they might get better returns.

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Peers
Company Name CMP
Larsen & Toubro 4053.00
Rail Vikas Nigam 296.55
NCC 160.70
KEC International 559.95
Kalpataru Projects 1244.85
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