Last week, Mudajaya organized a 3-day trip to its
Chhattisgarh power plant site to give the investing community an on-the-ground
feel of its ongoing IPP project in India. After travelling some 3,000km from KL
to the site in Raigarh, Chhattisgarh, we caught our very first glimpse of the
power plant project, which sits on more than 900 acres. All in all, we maintain
NEUTRAL on the company and keep our FV at RM2.66, pegging an unchanged 50%
discount to our SOP valuation.
Background on maiden
IPP venture. In July 2005, Mudajaya embarked on its maiden venture in
India’s power sector by taking up a 26% stake in RKM Powergen, the special purpose
vehicle (SPV) undertaking a 4X360MW coal-fired Independent Power Producer (IPP)
project worth RM5bn in Chhattisgarh, India. The SPV inked a Power Purchase Agreement
(PPA) with the Chhattisgarh State Electricity Board (CSEB) and Power Trading
Corp of India to supply power at a
pre-fixed tariff, subject to fuel and interest costs pass-through.
Subsequently, Mudajaya’s 80%-owned subsidiary, MIPP International, was awarded
the engineering, procurement and construction (EPC) contract worth RM3.4bn for
all 4 units of the plant. While the project has encountered some delays in the
past due to various issues, management confirmed that the first unit of its
plant would likely commence commercial operations by 1Q13, while the rest will
go on stream on a staggered basis every 3 months thereafter.
Source: OSK
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