Reliance Energy eyes road, rail deals

SINGAPORE: Reliance Energy Ltd said on Monday it will focus on infrastructure projects in its home market, where it sees the biggest opportunities as the country develops roads and rails and builds airports.

The company, part of the Anil Dhirubhai Ambani Group, expects Indian borrowing costs to fall in coming months as the central bank cuts interest rates, Reliance Energy director Lalit Jalan told the media.

"We feel strongly that Indian interest rates will come down as they haven't been changed for quite some time," he said. The Reserve Bank of India has kept its main lending rate unchanged at 7.75 per cent for almost a year after raising it five times between June 2006 and March 2007 as inflation has remained stubbornly high above 5 per cent.

Reliance Energy will borrow most funds from Indian bank as it pursues $500 billion in infrastructure projects that have been earmarked under India's five-year development plan, he said. "It's a $500 billion opportunity.

India is going through this huge infrastructure cycle. We are very short of power plants, we are very short of airports, railway stations, metros, bridges. India needs it all." "There are no assets that we are bidding for overseas."

Jalan's remarks came shortly after Reliance Energy lost out in the bidding for Tuas Power, a Singapore electricity generator that was sold to China's Huaneng Group last week. However, Jalan said Reliance Energy would look at PowerSeraya and Senoko Power the other two power companies that Singapore intends to sell by mid-2009 and make bids if it felt the investments made sense.

Indian firms are trying to invest in countries such as Venezuela and Iran often in competition with Chinese firms as India looks to use cash stockpiles for diversification and to lock in energy supplies to fuel its booming economy. But Jalan said he saw global oil demand weakening with oil prices over $100 a barrel.

Reliance Energy, which is seeking shareholders' approval to change its name to Reliance Infrastructure, has diversified into construction in recent years. Jalan said the firm has several projects underway that will require about $3.5 billion in capital expenditure, and is committed to developing two large special economic zones in India over 10 years at a cost of $10 billion.

Source : TET