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CLP Power alters strategies, looking for acquisitions

C. Shivkumar

BANGALORE, May 19

CLP Power International, the subsidiary of the Hong Kong-based China Light & Power Company Ltd, has altered strategies for remaining in India instead of pulling out of the country like other majors. CLP's new power strategy is now being determined throug h the mergers and acquisitions route.

Speaking to Business Line, CLP Power International's Country Manager, MR V.P. Sharma, said, ``We are seriously looking for acquisitions in the country.'' CLP has just completed integration of some of the Powergen's assets which were acquired early this year. These included Powergen's Phaguthan plant in Gujarat. But Mr Sharma declined to reveal any of the potential acquisition in the country, except that due diligence was underway on some of the projects.

CLP, which is pursuing a thermal power project in Karnataka with Tata group company as its joint venture partner, has also pitched for some of the distribution projects offered for private sector by the Delhi Vidyut Nigam. It has been shortlisted for one of the three circles offered for private sector in Delhi. However in these bids, CLP is going alone and actually competing with the Tatas who have also submitted their bids.

Mr Sharma also made it clear that CLP would pitch for distribution projects in other parts of the country including Karnataka and Andhra Pradesh. These States are due to begin inviting private sector interest in distribution privatisation programmes.

But despite these change in strategies, CLP Power was committed to development of the 1013-MW Mangalore Power Company, he added. MPC is the only greenfield venture for CLP power in the country.

He said that CLP power International and the Tatas, who are the joint promoters for the project, were prepared to go ahead on a reform-linked financing package. This reform-linked package has been adopted for development of Unit 7 of the Karnataka Power Corporation's Raichur Thermal Power Station. This financing package envisages setting up of a power reform fund as a fall back option to the project lenders out of disinvestment of State Government equity from utilities.

But in offering this concession, Mr Sharma made it clear that there was no going back on the countergurantee.``As far as we are concerned, a financial security package is not our condition.'' Asked whether CLP Power would insist on a counter guarantee fo r going ahead with the project, he said, ``Our official position is that we need a counter guarantee, since the project is being funded on a limited recourse basis''.

However, the Central Government's official position on acceptance of a reform-linked package for counter guarantee is still not clear. The Union Power Ministry and the Finance Ministry are still examining the implications of this kind of a counter guaran tee. Besides, only after the Centre gives its response, the company would be in a position to proceed with finalising new engineering procurement contractors (EPC) for the project. The previous EPC contractors, the Mangalore consortium, comprising Black & Veatch of the UK and D B Riley of the US, was dissolved after they had sought price increases more than a year ago.