XL Telecom enters into Power Generation

XL Telecom & Energy Ltd has announced that the Company has decided to enter into POWER GENERATION SEGMENT with initial investments in Spain, the current global destination for Grid Connected Solar Energy.

Saptashva Solar Ltd, a wholly owned subsidiary of the Company will establish a series of "Solar Farms" for Power Generation in Spain with a target for the first year of about 28 MW capacity. The medium term target is to install close to 200 MW of these farms in Spain and surrounding Portugal alone. Other countries are also being explored for establishing such farms to avail of the benefits offered and to go up the solar "value chain".

The solar farms proposed to be established in the first year would require a total investment of about Euro 168 Million or Rs 10 Billion. The project is expected to have debt equity ratio of 1:4 and would largely get funded by local banks. As the investments are being made in the wholly owned subsidiary of XL Telecom & Energy Ltd, the Company do not envisaging any dilution in the parent Company on account of this investment.

Based on the current policy and legislation, the project is expected to have 25 year PPA from the local Utility Company. Saptashva would generate on first full year of operations with this capacity about Euro 17.740 Million or Rs 1 Billion with 20% Margins for next 25 years. The first Solar Farm of 2.3 MW would be implemented before March, 2008 and the balance would get installed by Dec 2008.

The proposed model would have multi fold benefits to the Company, first it will give opportunity to be the only player to focus on alternative power generating player in the world, second it will ensure the Company moving in the Solar Value chain from the current Solar Photovoltaic Panel supplier to Total System Integrated Player, which mean substantially higher per watt realization going forward, while lastly it will create larger market for its parent Solar Production.

Spain offers significant opportunities in Solar Power Generations with its target of about 1,200 MW solar farms every year. Spain Government supports the investments in Solar by offering land on a long lease basis and also subsidized long term Bank loans.