Reliance Power (RPower) entered into an agreement with Japanese utility JERA to set up a 750-megawatt (Mw) power plant in Bangladesh, the company said on Tuesday. The investment will also help RPower repay Rs 835 crore worth of debt through relocation of its Samalkot power plant equipment.
“RPower signed a deal with JERA for jointly setting up 750 Mw gas-based combined cycle power project (Phase-1) in Meghnaghat, Bangladesh. RPower will hold 51 per cent stake while JERA will have 49 per cent in the joint venture company,” RPower said.
K Raja Gopal, chief executive officer for RPower said the project would be developed on a build-own-operate model and is expected to involve an investment of $750 million.
The agreement also includes RPower as the equipment provider for the project. RPower plans to use funds paid for the equipment for repayment of debt worth Rs 835 crore. In its statement, RPower said it would relocate one module of its combined cycle power project at Samalkot in Andhra Pradesh for the Phase-1 project in Bangladesh. RPower’s Samalkot gas-based plant took a hit owing to non-availability of gas.
“The transaction will result in debt reduction for Reliance Power of Rs 835 Crore ($116 million) payable to US-Exim,” the statement said. These payments are expected to trickle in once the financial closure for the project is complete. Raja Gopal expects financial closure to be complete in six to eight months time.
In its statement, R Power added the project represents India’s largest foreign direct investment in Bangladesh and from Japan to Bangladesh in the power sector. Energy ties between India and Bangladesh also includes an agreement signed by State-run power major NTPC's trading arm to supply 300 MW power to the country in September last year. India’s Tripura also supplies power around 190 MW power to Bangladesh.