China developes Indias power ecosystem
August 24, 2012

Extending their range of services in India, Chinese power equipment companies are expanding operations and creating their own ecosystem in India’s power sector.

While Shanghai Electric has long been supplying equipment to Reliance power, and China has also extended an almost US$2 billion loan towards the same, the move is aiding other Chinese companies into the sub continent. Recently, Anil Ambani led Reliance Power inked a deal with state-owned Chinese company China Datang Corp to develop and operate power and energy projects in India and overseas. Datang, is one of the five largest state-owned power producers in Mainland China with an installed capacity of 105,000 MW, over 50 percent of India’s total generation capacity, and employs about 98,000 people. It is engaged in the development and operation of power plants, the sale of electricity and thermal power, and the repair and maintenance of power equipment and power-related technical services.

The JV is expected to particularly target coal-based power projects built on Chinese equipment in India. According to the Economic Times, the scope of the preliminary agreement includes setting up a joint venture in India to offer operation and maintenance services to power plants and China Datang assisting Reliance Power in commissioning projects including the 4,000 MW ultra mega power project at Sasan in Madhya Pradesh, Central India. Equipment for Reliance’s Sasan project was sourced from Shanghai Electric. Datang electric, headquartered in Beijing is listed on both the Hong Kong and London Stock Exchanges.

While the agreement isn’t limited to Reliance’s power projects in India, Datang has said it would assist Reliance in investing and developing three coal mines in Indonesia and laying the transportation infrastructure.

As natural resources are limited, and coal based power is in high demand by both India and China, it only makes financial sense to collaborate rather than compete. China has long been providing India’s private and public power and infrastructure companies with equipment. Having nudged their foot into the huge market, bringing equipment operation and maintenance companies is only the next natural step.

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