Reliance Infrastructure - Agreement with Shanghai Electric :: Morgan Stanley

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Reliance Infrastructure Limited - Agreement with Shanghai Electric for 36x660 MW units
Quick Comment: On October 27, 2010, the board of
Shanghai Electric group (SEC) passed a resolution to
supply equipment and provide service contracts to
Reliance Infra Projects International Limited (a
subsidiary of Reliance ADAG) for a total consideration of
US$8.3bn. We believe this order is one of the largest
placed by an Indian private company on a Chinese
equipment supplier and the two companies are likely to
sign the agreement today. In our view the implied
volume discount that Reliance ADAG has enjoyed is
about 15%.
What's new: The contracts include the supply of boiler
turbine generators and spare parts for 36 units of 660
MW each. The projects for which the capacities will be
supplied include the following:
• 7,920 MW (12x660 MW) Krishnapatnam TPP,
with a contract value of US$2.8 bn.
• 7,920 MW (12x660 MW) Chitrangi TPP, with a
contract value of US$2.8 bn.
• 7,920 MW (12x660 MW ) Tilaiya TPP, with a
contract value of US$2.7 bn.
SEC will design, manufacture and supply boilers, steam
turbines, generators, auxiliary engines and equipment;
in addition, they will also provide services such as
guidance on installation, debugging and trial run,
performance test and training. The execution period of
the contracts is likely to be ten years and 3 to 4 units of
660 MW each are likely to be delivered to the company
every year. Reliance ADAG is in talks with several
funding institutions such as Export Import Bank of China
and China Development Bank for possible funding
arrangements.