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Tata Power to Set Up JV With Exxaro

  • Exxaro aims to list the new company on the Johannesburg Stock Exchange by August.Tata Power Co. Ltd, India’s largest private power utility, will form an equal joint venture (JV) with South African miner Exxaro Resources Ltd to build power plants in South Africa, Botswana and Namibia.Tata Power will invest in the new company, to be named Cennerji (Pty) Ltd, through its unit Khopoli Investments Ltd.

  • “No specific target has been set for investment,” Tata Power’s chief financial officer and executive director S. Ramakrishna said. “Although the joint venture will be initially focused on opportunities in the renewable sector, we may also consider setting up coal-based power projects in South Africa in the future.”Exxaro aims to list Cennerji on the Johannesburg Stock Exchange by August, the company said in a statement on Monday.

  • The South African government last year announced a $12 billion programme to set up renewable energy projects. In the first phase, it has called bids for 1,000 megawatts (MW) of wind and solar power projects. The energy-deficient country plans to generate 3,725MW of renewable power by 2016. Cennerji intends to participate in the programme.

  • “We are primarily an Indian company and plan to remain so. We entered into a JV with Exxacro as it was looking for a reliable partner who has a large operating portfolio in the renewable space, and we have 400MW of wind capacity and 30MW of solar capacity,” said Ramakrishna.Exxaro generates a substanial part of its revenue from coal and iron ore mining and plans to diversify into power generation.

  • “Due to uncertainties in the Indian power sector, Indian power producers were looking for opportunities in other developing countries to derisk their business, but Tata Power’s decision is driven more by the South African government’s programme in the renewable sector,” said Kameswara Rao, executive director and leader of the energy, utility and mining practice at consultancy firm PricewaterhouseCoopers Pvt. Ltd.Tata Power has an installed capacity of 4,772MW. It is building a 4,000MW power project in Mundra, Gujarat, that will use imported coal. Tata Power shares closed at Rs. 113.25, down 2%; the benchmark Sensex shed 1.55%.

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