SRM Energy Ltd. (formerly known as Hitkari Fibres Ltd.), a BSE listed company and a subsidiary of the Spice Energy Group, has embarked on implementing a total of 4,000 MW of power generating capacity in India. To facilitate faster fund raising and resource mobilization, the Group has taken over Hitkari Fibres Limited, a Company listed on the Mumbai and Delhi Stock Exchanges and merged the Special Purpose Vehicle formed for implementing power projects - SRM Energy Private Ltd. - with Hitkari Fibres Ltd., and the merged entity has been named as ‘SRM Energy Ltd.’. SRM Energy Ltd. intends to set up two power plants in India, with total capacity of 4,000 MW. Each power plant will comprise of an individual capacity of approximately 2,000 MW. The first plant planned at Cuddalore in Tamil Nadu will be based on imported coal, and the second in Eastern India will be a pit-head based plant. The plants are expected to become operational by 2013 and 2015 respectively.
Numerous factors provide the required impetus for consistent growth in this sector. These include the increasing demand and supply gap in India, with a peak demand–supply gap of nearly 11.6 percent on an overall basis. In addition,several factors such as time differentiated tariffs, open access system, the emergence of power trading and development of a spot market, subsidy reduction on agriculture and rural consumers, amongst others, are set to be implemented over the next five years, making the market more amenable for private power players. The increase in cost of supply and the willingness of industries and townships to pay a higher per unit price for dependable supply, and the elimination of tariff cross-subsidies are further favorable factors that will contribute to ensuring the project’s success. As a result of the above factors, the purchase price of power has shown a consistent increase. In fact during the quarter April – June 2008 about 99% of the total traded electricity was traded at Rs. 6.50 to Rs . 8.50 per kWh.
SRM Energy’s first project will be an imported coal fired plant located at Cuddalore in Tamil Nadu. Out of a total requirement of about 1,200 acres of land for the project, about 500 acres have already been acquired. The company has already received a letter of facilitation from the Tamil Nadu Government for setting up a 2,000 MW power plant.SRM Energy has also signed a long-term Coal Purchase agreement for the supply of 5 million tonnes of coal per annum for 20 years from mines in Indonesia, and is also looking at opportunities to acquire captive mines. The detailed EIA study is underway after obtaining approval of the Terms of Reference (TOR) from the Ministry of Environment & Forests. The company has invited tenders from prospective EPC contractors, and the final EPC contract is scheduled to be awarded by May 2009. Finally, SRM Energy has entered into a PPA for sale of entire power generated by the Cuddalore plant with the Tata Power Trading Company Ltd.
SRM hopes to become a significant player in the industry by completing the projects as fast as possible.
