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17 December 2007 - AES, the US power company, plans to build power plants worth $2.8bn in India, marking the biggest move by a foreign company into the country's electricity sector since the high-profile failure of Enron more than six years ago.
The company is finalising the land acquisition for a $1.4bn coal-powered plant in Chhattisgarh, a landlocked state in eastern India. It will invest $400m in the 1200 megawatt project and will fund the rest through loans.
AES is in discussions with the International Finance Corporation, an arm of the World Bank, as well as with local lenders such as ICICI, India's largest private sector bank, for financing. In another project, AES will build a $1.4bn expansion of its existing power plant in the mineral-rich eastern state of Orissa.
It opened the plant in 1998 in a joint venture with Orissa's government, which holds 51 per cent. The partners will together invest $400m in the expansion and get financing for the rest.
India urgently needs electricity to fuel annual economic growth of more than 9 per cent. Although private Indian companies are bidding for projects, foreign power companies are still hesitant.
They remain nervous about the complex regulatory and political environment in India after Enron, the bankrupt US power trader, closed its $2.9bn power plant near Mumbai in 2001.
India has 132 000MW of energy capacity for its population of 1.1bn, compared with installed capacity in the US of 850 000MW for a population of 300m.
The country's energy demand is expected to double between 2005 and 2030. Currently, only about half of India's population has access to modern electricity.
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