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Public issue route open for RPower

Mumbai, Jan. 14: Reliance Power will be able to raise money from the capital market through a public issue if it chooses to take that route to tie up funds for its large power projects.

That is the biggest positive for the Anil Ambani group which chose to press for a settlement of the price rigging charge relating to Reliance Communications that was supposedly bankrolled by funds raised by Reliance Infrastructure and Reliance Natural Resources Ltd through external commercial borrowings and foreign currency convertible bonds in 2006.

During Chinese premier Wen Jiabao’s visit last year, the company had tied up a Chinese loan of $1.1 billion (or Rs 5,000 crore) to buy equipment from Shanghai Electric for the 4,000mw Sasan power project.

Earlier, it had also tied up a $5-billion loan facility from the US Exim Bank for several large power projects.

With the debt component tied up, RPower could choose to raise funds from the capital market sooner or later.

RPower has ambitious expansion plans in the power generation sector. The company plans to create a generation capacity of 35,000mw by 2017. It aims to generate 5,000mw by 2012 and raise that to 25,000mw by 2015.

Observers say RPower needs a lot of money to fund such an expansion programme, a part of which may have to come from the primary market.

New auditors

In its consent order, the market regulator said RNRL and Reliance Infrastructure would have to appoint new statutory auditors for a period of three years starting from 2010-11.

At its annual general meeting held last September, shareholders of RPower had given their approval for the appointment of Chaturvedi & Shah and Price Waterhouse as auditors of the company till the conclusion of the next annual general meeting.

It is not known whether these two auditors will be allowed to vet RPower’s financial accounts for 2010-11 in the light of Sebi’s consent order.

Meanwhile, Pathak HD and Associates was the auditor for RNRL. After the merger of RNRL with Reliance Power, Pathak H.D. and Associates was appointed as the auditors for Reliance Infrastructure along with Haribhakti and Company. It could not be ascertained whether Pathak HD and Associates would be allowed to stay on as one of two auditors for Reliance Infrastructure.

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