Houston Industries' energy subsidiary is teaming up with an Indian developer to build a $94 million petroleum coke plant and cogeneration facility in India.

Houston Industries Energy will take a 20 percent stake in the project, its first in India to secure financing and proceed to the design and construction phase.While a state agency selected Houston Industries, the parent company of Houston Lighting and Power, to build, own and operate a 500-megawatt power project, the company has yet to work out an agreement on the purchase of electricity.

The plant is designed to produce 275,000 tons a year of calcined (powdered) petroleum coke, which will be used in smelting aluminum. India is a world supplier of aluminum and is expected to be an emerging consumer.

Gas recovered from the plant will be used to fuel a 49-megawatt cogeneration facility serving local industrial customers.

The Rain Calcining Ltd. project, located in Visakhapatnam, a port on India's east coast in the state of Andhra Pradesh, "is the largest of its kind in Asia and is expected to have operating costs that are among the lowest in the global coke calcining industry," said Lee Hogan, president and chief operating officer of Houston Industries Energy, in a statement. "Lower costs, together with income from the sale of electricity from the cogeneration facility, will make this a very attractive investment for us."

Houston Industries Energy will provide technical services in connection with the design, construction, operation and maintenance of the power generation facility.

The participation of industrial partners and the International Finance Corp., a member of the World Bank Group that has agreed to provide long-term financing, adds a measure of stability to the project at a time when investors are having second thoughts about investing in India, observers said.

This month, in a move that appeared to be politically driven, the Maharashtra state government canceled a $2.8 billion power project led by Enron Corp. of Houston.

"The risk profile is substantially lower than if you're doing business with the government," said Edward J. Tirello, a stock analyst with Natwest Securities Corp. in New York.

"The things that will help you manage risk are things like having a strong local partner (and) having the (International Finance Corp.) as an equity holder," said Alan Townsend, an analyst with National Economic Research Associates, a Washington economic consulting firm.

The other principal owner of the plant, N. Jagan Mohan Reddy, will hold a 25 percent stake in the project. Mr. Reddy is an Indian developer with interests in cement manufacturing, textiles and construction. Applied Industrial Materials, a U.S. marketer of petroleum coke, also will invest in the project, along with other Indian investors.