Reliance Energy Transmission Ltd (RETL), the transmission arm of Reliance Energy, is set to become an inter-state transmission licensee, with the approval of the PowerGrid Corporation of India (PGCIL) board, reports DNA.

PGCIL selected Reliance Energy as a joint venture partner through international competitive bidding for setting up the transmission lines for the Parbati and Koldam hydro-electric projects in Himachal Pradesh and two projects under the Western Region System Strengthening Scheme-II (WRSS-II) in Maharashtra and Gujarat on a build, own, operate (BOO) basis. These projects would entail an investment of about Rs 3,500 crore. The two companies would sign a letter of intent for the WRSS-II project and a shareholder agreement for a joint venture for the Parbati and Koldam projects soon.

The approval for WRSS-II project, for which RTIL was selected in January 2007, was delayed since there were differences with the provisions and transfer clauses between REL and the government. “Though it was initially conceived to be on a build, own, operate and transfer (BOOT) basis for 25 years, it would now be on a BOO basis,” said a source. This implies that the project might not be transferred at the end of 25 years, though RETL would have to seek a fresh licence.

The change was made since PGCIL objected to taking on the liability of buying out the private partner in case of a payment default or any other problem during the construction or developmental stage. “With REL agreeing to execute the projects without any buyout commitments and transfer clauses, the way for the projects was cleared,” said a REL executive. PGCIL had selected REL as its partner in December 2005 for the 1,600 MW Parbati-Koldam project.

NTPC Ltd and National Hydro-electric Power Corporation (NHPC) are setting up the projects. Parbati-Koldam Transmission Company would transfer electricity through a 300-km line from Parbati-Koldam to Ludhiana. The project is worth Rs 800 crore. The project is scheduled for completion, matching with the associated generation projects. The power-starved states of the northern region, including the National Capital, would benefit from the transmission system.

The WRSS-II project, scheduled to be commissioned by March 2010, would benefit Maharashtra, Gujarat, Madhya Pradesh, Chattisgarh, Daman & Diu, Goa and Dadar & Nagar Haveli.

The Rs 2,000-2,500 crore system-strengthening project covers a length of 1,500 km in Maharashtra, Gujarat and parts of Madhya Pradesh and will handle 4,000 MW of power.

Power-to-telecom business house Reliance Anil Dhirubhai Ambani Group (R-ADAG) plans to enter cement manufacturing by setting up a plant near its 4,000MW coal-fired power project proposed at Sasan in east Madhya Pradesh, reports Mint. The cement plant proposed by R-ADAG will use millions of tonnes of fly ash generated at the power station, billed ultra mega power project for its large capacity, to produce cement. Fly ash is generated while burning coal. Not only is the cost of cement production using fly ash 5-10% lower than the cost using the traditional clinker-based method, it also saves on transportation and disposal of a material seen as environment-unfriendly.

“R-ADAG plan to set up a cement plant near the newly bagged power project at Sasan to utilize the fly ash generated from the project,” said a senior government official, who did not wish to be identified.

An R-ADAG executive declined details of the cement project. J.P. Chalasani, director, business development, Reliance Energy Ltd, said, “Our company keeps on evaluating various proposals from time to time.” Reliance Energy is the parent of Reliance Power, the company in charge of the Sasan project. Ultra mega power projects are expected to see a major expansion of cement manufacturing capacity in India with cement companies such as Grasim Industries Ltd, Ultratech Ltd, Sanghi Cement Ltd, The India Cements Ltd, Zuari Cements Ltd and My Home Industries Ltd already evincing interest in setting up greenfield cement plants in the vicinity of such power stations.

The size of the R-ADAG cement plant was not immediately known. Going by the amount of fly ash, some 9 million tonnes a year, the 4,000MW power project will generate, the cement plant capacity could be huge. One tonne of cement needs an input of 0.2 tonne of fly ash. “Depending on the amount of fly ash the projected is expected to produce, R-ADAG can put up a capacity of 45 million tonnes per annum (mtpa). But nobody would want to put up such a huge capacity. The impact of R-ADAG’s move will depend on the size of the unit,” Rupesh Sankhe, an analyst tracking the commodity for ICICI Direct, said. The cost of setting up a 1mtpa cement capacity is up to Rs 400 crore.

The Rs 20,000 crore Sasan project was awarded to Reliance Power after it matched the winning bid for the project after the original winning consortium of Lanco Infratech and Globeleq Singapore was disqualified by a government panel on 25 July for violating terms of the deal. Analysts said by the time the Sasan project goes online, cement capacity in the country may be less beneficial to cement producers, who have enjoyed a 30-34% price rise in different regions in the past year alone. India, the world’s second largest cement market with Rs 55,000 crore estimated demand, has a cement manufacturing capacity of 148mtpa. “The power project is expected to come up only after 2012, when the cement supply is expected to outstrip demand,” Sankhe said.

E.N. Murthy, secretary general of trade body Cement Manufacturers Association, welcomed the capacity addition. “Around 60% of the cement produced in India uses fly ash. In a situation of supply-side constraint, any additional capacity is good news for the industry,” he said.

The government had planned nine ultra mega power projects. While those at Sasan, Mundra in Gujarat, Tilaiya in Jharkhand, Krishnapattnam in Andhra Pradesh, Tamil Nadu’s Cheyyur and Orissa’s Jharsuguda are on track, others at Girye in Maharashtra, Tadri in Karnataka and Chhattisgarh’s Akaltara are yet to take off. Sasan, Tilaiya and Jharsuguda are coal pithead projects and those at Mundra, Krishnapattnam and Cheyyur are based on imported coal.

Reliance Industries (RIL), which operates the third-largest refining capacity in the world, is in negotiations to expand its downstream business in new geographies like Central America.

The private sector oil major, which is developing its business across the entire oil and gas chain, is exploring options of setting up a refinery in Central America, most likely in Guatemala, in line with its strategy of becoming a key retail player in the booming US markets, according to person’s familiar with RIL’s strategy.

This move comes even as speculation is high that RIL may also look at setting up a refinery in Saudi Arabia. The Saudi government, which is keen to attract investments in the region, has written to leading refiners, including RIL, to partner a Saudi oil company and develop a 20-million-tonne greenfield refinery at Jizan, Saudi Arabia. RIL officials declined to comment on market speculation.

It is not clear whether RIL would want to construct a greenfield refinery. Although, moving into Central or Latin America is definitely a part of the company’s larger plans, it may make sense to acquire an existing refinery that can be expanded and upgraded, an official said.

This is because costs of building a new refinery are very high given the tight global demand-supply situation. The Gulf of Mexico, which has seen huge devastation following the hurricane, could also see new assets being created in the near future.

Although, initially RIL was looking at Panama as a possible destination for expanding its refinery operations, Guatemala as an alternative option appears to have gained currency of late. The national oil company of Qatar is keen to tie up with RIL for a refinery in this region. RIL has a fair idea of the crude quality from this region.

The company has sourced crude from this region, called Maya crude, to produce petroleum products at its Jamnagar refinery. The ministry of external affairs has been working on improving economic ties with countries in this region.

In June this year, minister of state for external affairs Anand Sharma led the first-ever ministerial delegation to Guatemala. Officials in the know said that the MEA has had parleys with senior RIL officials and has asked the oil major to study the possibilities of setting up a refinery in Guatemala.

Currently, trade between India and Guatemala is minuscule. In 2006, India exported products worth $73 million to the country.

“Both countries (India and Guatemala) are exploring business opportunities. An IT training institute by TCS has been set up in Guatemala,” an MEA source said. Officials in MEA believe that there is a great potential of increasing the trade with Guatemala significantly. Indian exports to Guatemala are largely dominated by auto parts, tools, chemicals, pharmaceuticals and textiles.

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