Jindal India Thermal Power Limited, a subsidiary of Jindal Poly Films, is planning to raise private equity funding for its thermal power plant in Orissa, by diluting 10-15% stake.

The funds raised will be used to set up a 1800 Mw power plant in Orissa at a total cost of Rs.9,121 Cr.

Transaction Reference: Business Standard

Jindal India Thermal's 1800 Mw plant will have three units which will be commissioned in March 2012, September 2012 and September 2013. Jindal Poly proposes to invest Rs.200 Cr in a 600-megawatt (MW) pit-head coal-based power project in Orissa.

The project is developed on debt equity ratio of 80:20 and has raised Rs.1800 Cr debt with consortium banks led by Punjab National Bank.

The project would run partly on captive coal mine and partly on linkage coal.

Jindal India Thermal has signed a second power purchase agreement (PPA) with Tata Power Trading Company for sale of 400 Mw power from the plant on merchant basis for 12 years. With the signing of PPA, the company will sell a total of 900 Mw to Tata Power for which it has been guaranteed a minimum tariff of Rs 2.70 a unit besides getting a 10 per cent share in the upside.

It has also signed PPA with the Orissa government-owned utility Gridco for supply of another 250 Mw from the power plant in Angul district.

Jindal Poly Films is a part of Rs.3,000 Cr BC Jindal Group which is involved in manufacturing of polyester films, polypropylene film, steel pipes and photographic products.

Jindal Poly had invested Rs.153 Cr in its subsidiaries and affiliates as on 31 March 2010.

Private equity players are betting on India's power sector due to demand-supply mismatch.

Last year, Visa Power Limited raised $100 Mn for it 1200 Mw power project in Chhattisgarh, while GVK Energy Ltd, subsidiary of GVK Power and Infrastructure Ltd raised Rs. 1498 Cr from Actis, GIC and 3i Infrastructure fund for 4200 Mw power project.

CESC's Ltd subsidiary Haldia Energy is planning to raise Rs.1000 Cr PE for its power project.

According to Livemint, in the electricity sector alone, India is facing a peaking shortage of nearly 12% and an energy shortage of 9-10%. Sushilkumar Shinde, Union minister for power, in October said India was targeting a capacity addition of 62,000MW in the 12th Five Year Plan (2012 -2017). In 2007-2012, the funding requirement in the Indian power sector has been estimated at $230 billion.

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