IL&FS aims to more than triple power generation capacity

By Devidutta Tripathy and Sumeet Chatterjee

MUMBAI (Reuters) - Infrastructure Leasing & Financial Services Ltd (IL&FS) plans to more than triple its power generation capacity in five years, betting on demand for renewable energy sources such as wind and solar in Asia's third-largest economy.

Prime Minister Narendra Modi has made renewable energy a priority as he looks to address the country's chronic power shortages and fulfil an election promise of round-the-clock power to all Indians by 2022.

IL&FS, whose generation capacity is about 1,500 megawatts (MW), including about 900 MW of renewable energy, will take the total to about 5,000 MW in the next five years, Managing Director Hari Sankaran said on Wednesday.

Half of that would be from coal and gas and half will come from renewable energy.

"It is potentially possible for solar to become a really meaningful player in the mix, in the energy mix of the country as a whole. Because the price points have become more reasonable now. And India is really a big market," he said.

The company has a small solar power generation capacity, but will add 1,000 MW. Wind power generation capacity is set to more than double to 1,500 MW from 700 MW now, Sankaran said.

Japan's Orix Corp and sovereign wealth fund Abu Dhabi Investment Authority (ADIA) own more than a third of IL&FS, whose biggest shareholder is Indian state-run insurer Life Insurance Corp of India.

IL&FS expects capital expenditure of about 40 billion rupees ($641.5 million) on its energy businesses in the next three years, he said, adding they were looking for funding options.

The company is open to listing its energy assets as a business trust in Singapore as well as through an initial public offering in India. Selling a stake to private equity is also an option, he said.

"Business trust for stable cash flows appears interesting. So we looked at it, we are looking at it. The capital markets in India are attractive from some points of view for energy," he said, declining to give a time frame for a possible listing.

($1 = 62.3500 rupees)

(Reporting by Devidutta Tripathy and Sumeet Chatterjee; Editing by Subhranshu Sahu and Louise Heavens)