JSW to ride on energy project in Bengal for steel plant

With JSW Bengal Steel (JSWBSL) failing to raise debt for its integrated steel, power and cement plant in Salboni due to the global financial crunch, group company JSW Energy will go public to raise funds for the power plant.

Earlier, JSWBSL was to raise funds for the steel and power plants at the integrated facility.

"The unbundling of the power project will help the steel project to reduce the burden that will help in receiving financial closure from bankers to get confidence in the steel project after the power project takes off," JSW Bengal Steel joint MD and CEO Biswadip Gupta said here today.

JSW Energy said it would promote a 1,600 Mw (800x2Mw) power project at a cost of Rs 7,680 crore through a SPV of JSWBSL and JSW Energy in 26:74 ratio.

The company proposed to sell 1,000 Mw after consuming a maximum of 600 Mw.

"The project would be funded through a debt equity of 3:1 and commercial operation would be from February 2015," JSW Group Joint CFO Krishna Deshika said.

The project cost would be partly funded by the IPO by JSW Energy which will hit the capital market to raise Rs 3,000 crore.

JSW Energy aims to raise capacity to 3,140 Mw by April 2011 and 11,390 Mw by 2015.

Company sources said JSW was keen on merchant power projects in the state and if allowed could move ahead with power projects totalling 4,000-5,000 Mw.

Desika said the financial closure of the 3-million tonne first phase steel project costing around Rs 11,000 crore would be complete in October 2010.

Gupta said work on the the steel plant at Salboni was likely to begin once the expansion at Bellary to 10 million tonne was complete by March 2011.

He said the SEZ for the Salboni steel project was crucial as without tax benefits it could not compete with other steel plants with imported inputs.